Benchmarking is a systematic process for identifying and implementing best or better practices. Although experts break benchmarking into several types, there exist two main types; “Informal” and “Formal” Benchmarking.
Informal Benchmarking is a type of benchmarking that most of us do unconsciously at work and in our home life. We constantly compare and learn from the behaviour and practices of others – whether it is how to use a software program, how to cook a better meal, or play our favourite sport. In the context of work, most learning from informal benchmarking comes from the following:
• Talking to work colleagues and learning from their experience (coffee breaks and team meetings are a great place to network and learn from others).
• Consulting with experts (for example, business consultants who have experience of implementing a particular process or activity in many business environments.
• Networking with other people from other organisations at conferences, seminars, and Internet forums.
• On-line databases/web sites, such as the BPIR, and publications that share benchmarking information provide quick and easy ways to learn of best practices and benchmarks.
There are two types of Formal Benchmarking – Performance and Best Practice Benchmarking. Performance benchmarking; this involves comparing the performance levels of organisations for a specific process. This information can then be used for identifying opportunities for improvement and/or setting performance targets. Performance levels of other organisations are normally called benchmarks and the ideal benchmark is one that originates from an organisation recognised as being a leader in the related area. Performance benchmarking may involve the comparison of financial measures (such as expenditure, cost of labour, cost of buildings/equipment, cost of energy, adherence to budget, cash flow, revenue collected) or non-financial measures (such as
absenteeism, staff turnover, the percentage of administrative staff to front-line staff, budget processing time, complaints, environmental impact or call centre performance).
Best practice benchmarking; this is where organisations search for and study organisations that are high performers in particular areas of interest. The processes themselves of these organisations are studied rather than just the associated performance levels, normally through some mutually beneficial agreement that follows a benchmarking code of conduct. Knowledge gained through the study is taken back to the organisation and where feasible and appropriate, these high performing or best practices are adapted and incorporated into the organisation‘s own processes. Therefore best practice benchmarking involves the whole process of identifying, capturing, analysing, and implementing best practices .
Benchmarking are sample programs that represent at least a part of the buyer’s primary computer work load. They include software considerations. Bench marking problems are oriented towards testing whether a computer offered the vendor meets the requirements of the job of the buyer. Obviously benchmarking problems can be applied only if job mix has been clearly specified. If the job is truly represented the selected bench marking problems, this approach can provide a realistic and tangible basis for comparing all Vendors’ proposals. Tests should enable buyer to efficiently evaluate cross performance of various systems in terms of hardware performance.
But these problems take considerable time and effort to select problems representative of the job mix, which must be precisely defined. It also requires the existence of operational hardware, software and services of systems.
However, they help the manager to extrapolate the performance of the Vendor’s proposal on the entire job mix.