In part one of our series; we discussed how benchmarking is an exercise where an organization evaluates their performance or procedures against market data, either internal or external. We also reviewed how benchmarking data can be utilized by the organization for such purposes as defining best practices, identifying areas of improvement, and understanding the competitive environment.
No matter the purpose of your analysis, engaging in any type of benchmarking exercise is extremely beneficial. Once an organization obtains benchmarking data, they can apply the information to various aspects of their operations.
A good benchmark uses as much information and data as possible to get the most in-depth understanding of the market and organizational status. Time and resources need to be dedicated to collecting the necessary data, analyzing for relevant information, and developing a report that can be easily understood and utilized by many. This is just one reason organizations use independent benchmarking companies to perform analyses on their operations. There are a number of benefits to using an independent firm for your benchmarking needs, such as the following:
Best Practices: An organization that is dedicated to performing benchmark analyses for clients will have established processes and procedures for performing evaluations and creating reports that clients are able to benefit from. Independent firms have best practices that are at your disposal, they are able to perform benchmarks efficiently and effectively, alleviating the time and resource requirements.
Database Accessibility: Not only do independent firms have best practices that your organization can benefit from, but they have databases and information which can be easily accessed for your analysis. These companies can provide you with readily available information you would not have otherwise had access to, including data collected from previous work, subscriptions to data resources, and partnerships with other independent firms.
Industry-Specific Knowledge: Independent firms may specialize or have significant experience with a particular industry or business category. For specific industries, such as the healthcare or pharmaceutical industry, there needs to be a certain level of understanding of the industry in order to deliver an effective report. Those firms that have a specialization are aware of the latest trends in the industry or business category and have an understanding of the competitors in the market most applicable to your organization.
Multiple Category Expertise: Unlike specialized benchmarking companies, those that do not specialize can provide your organization with a diverse service offering for your entire operation. They will have access to a variety of information in their databases for all of the business categories you wish to evaluate. They will be able to offer you cross-category examples that you may not have considered or thought to be relevant before.
Objectivity: One of the biggest downfalls of performing your own benchmark analysis is the lack of objectivity when evaluating the performance of your organization. Without an objective point of view looking at your internal operations, personal biases may come into play which could affect the end results. Independent benchmarking firms offer the outside-perspective needed to get the most honest and un-biased results and recommendations about your organization.
Benchmarking is an important business exercise so that organizations can operate at peak performance levels and gain a competitive advantage in their industry. While it is possible to perform an analysis internally, there are multiple advantages to using an independent benchmarking company. At Source One we have established practices and procedures in benchmarking for a variety of industries and business categories.
In part 3 of Source One's benchmarking series, we will discuss the key to stakeholder involvement to ensure a successful benchmark.