CoreConnex | Business Systems for IT Service Companies

Getting benchmark data for your business can be a challenge, but it is even more difficult to put this information to work to improve business performance.

The first thing to consider is the source and applicability of the benchmark data. There are a lot of general business statistics and ratios that can be found or purchased, but they usually only apply to an industry classification such as “service company.”  If you are an IT service company, you really should be looking for benchmark data that applies specifically to your service line of business and not confused with other lines of business such as hardware sales, software development or hosting services.

The next question to ask is: are the benchmarks just simple averages or are they the averages for top performing companies. This is a big difference. If the benchmarks are simple averages, they will include poor performers as well as top performers and will not provide meaningful targets for a company that wants to build a top-performing business.

Right along with benchmark data should be “best practice” guidelines. The benchmarks tend not to tell the whole story because they are strictly numbers.  Best practice guidelines explain how top performers obtain and exceed benchmark numbers.  Benchmarks without best practice data is like getting a recipe that only shows the ingredients and omits the “how to” steps.  The how-to information makes the dish come alive and makes all the difference.

Once you have the benchmark data and best practice guidelines, the next step is to put it to work for your company.

Main challenge: How do you translate the knowledge of benchmarks and best practices into operations and business growth?

Here are 5 key steps for putting benchmarks and best practices to work in your company:

1. Goal setting - set 1 to 3 broad business goals that summarize the overall impact you are trying to achieve by using selected benchmarks.
2. Assign ownership - each performance measure and related best practices should be assigned to a specific person. Even if it is all going to be done by one person (perhaps just you) stating who is responsible for getting results is an important psychological step.
3. Monitor and follow-up - create a standing schedule for progress reviews. This should be done at least monthly and should include all responsible players and key participants. Whether it is good news or bad news, everyone should get to see the original goal, the progress that was expected to be achieved by the date of the review, the actual progress made and an analysis of the difference between planned and actual achievements.  Reviews should always include recommended corrective actions if goals are not being met.
4. Goal assessment - periodically, perhaps quarterly but at least annually, a review of the chosen goals should be conducted. This is very different than # 3 above.  This is about asking the question: Am I choosing the right goals and am I setting the company up for success?  This is where you decide if you or the company are really committed to achieving selected goals and perhaps make decisions to set easier goals or even more aggressive goals.  You may also make changes to how you are approaching assignment of ownership or changing the monitoring and follow-up process.
5. Benchmark updates - benchmarks constantly change and so should any plans that are based on them.  In a volatile industry like the IT service sector, it is likely that benchmarks will change significantly. Using old data can take a company in the wrong direction and be very damaging.

The rewards for deciding to become a top performer are well worth the effort.  Ironically, it is usually the companies that have top performance characteristics that are most able to use benchmarks and bet practices to optimize their business. But all companies can make a conscious effort to get on this track and build this into their business management disciplines.

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CoreConnex specializes in professional services automation (PSA) software for VARs, MSPs, channel distribution partners, IT service providers and other professional service companies. We encourage you to share experiences and perspectives as players in this professional community. This blog is moderated. Comments that are unprofessional or derogatory will not be posted.