By Dennis Bouley
“World class” is a term used across many industries to describe organizations that are perceived by customers and industry-experts as being among the best of the best. Some organizations loosely proclaim themselves “world class” in their advertising, but is there a way to determine whether a particular organization truly meets world class standards?
In fact, only about 10% or less of organizations qualify as “world class”. Not all organizations can be the best. Most, by default, have to be classified as secondary or tertiary organizations. On the other hand, all businesses don’t have to be world class to be successful.
However, if the goal of a particular organization is to grow revenues and gain competitive advantage, it helps to find a structured means to evaluate one’s internal organization and then to compare oneself to “peers” within the same industry. It also helps to compare yourself to world class organizations to find out how close your organization might be to attaining that lofty goal. In fact, progress and improvement on any level is very difficult to foster if no concrete and accurate means of measurement and comparison is put into place.
That’s where an organization like the Hackett Group comes in. According to B. Anthony Snowball, Hackett Group Global Practice Leader, a first step toward achieving the goals of growing revenues and gaining competitive advantage is to use empirical and fact-based information to bring awareness surrounding internal performance and identifying what can be done to enhance that performance.
“Benchmarking is a way of discovering whether the best performance is being achieved. Key performance indicators are gathered and assessed, and then compared to both peers and world class organizations so that gaps in a particular organization's processes can be identified in order to achieve a competitive advantage,” he said.
Digitalization Makes Benchmarking More Powerful than Ever
Over many years, Snowball’s organization has benchmarked the vast majority of Dow Jones registered companies and 80% of Fortune 100 organizations. The actual practice of benchmarking has evolved dramatically in recent years. “Traditionally, we gathered efficiency, effectiveness and cost information from our clients over an 8 to 12-week period of time. The clients would gather the needed information and then Hackett would provide the analysis. We would calculate the benefit of improvement for the executives and then would advise what steps and actions would be necessary to realize those benefits,” he said.
Now the entire experience of benchmarking has been digitized and is cloud-based. According to Snowball, the automated benchmarking experience allows clients to spend much less time gathering information because of the built in electronic workflow. “Through use of an algorithm,” said Snowball, “the system addresses an entire lifecycle including an initial diagnosis of the ‘as is’ situation, prioritization of improvements, and tracking and management of those improvements to make sure the organization is attaining the originally intended performance-driven benefits.” Clients can also access weekly, monthly, quarterly, and annual metrics and group them into dashboards trending progress against set targets over time.
Companies who engage in the benchmarking exercise receive a comparison of their own company to both a median of a relative peer group and to world class level organizations. No company names, or individual company performances are shared. The data presented is in aggregate format and is drawn from a minimum of 12 peer organizations. The benchmarking data includes insights from the financial, procurement and supply chain aspects of operations and has been gathered over three decades of benchmarking work.
“Benchmarking on a regular basis has proven beneficial to those businesses who build it into their workflow as a standard practice. It’s like going to a doctor more regularly. When a health problem within a human patient is diagnosed early, that individual will have a tendency to be healthier and enjoy a longer life expectancy. The same holds true for those businesses who make an effort to stay connected to their corporate health,” concluded Snowball.
The Hackett Group (NASDAQ: HCKT, www.thehackettgroup.com) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies, offering digital transformation including robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics, working capital management and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement and information technology, including its award-winning Oracle and SAP practices.
Dennis Bouley is Editorial Director of MyPurchasingCenter.com and special advisor to MediaSolve Group, a strategic B2B marketing services firm focused on helping companies and institutions leverage the web and social media to achieve business goals. He spent 18 years at Schneider Electric as Managing Editor of Global Publications, and was responsible for cross-division management of the corporation’s white paper and customer success story processes. Prior to that, he spent 10 years working for IBM managing both small and large accounts. He holds a Bachelor of Arts in Journalism from the University of Rhode Island and holds a Certificat Annuel from the Sorbonne in Paris, France.
George E. Krauter
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