Impact on Stakeholders Benchmarking

The process of comparing

one's business processes and performance

metrics

to

industry bests and best practices from

other companies.

Benchmarking Internal vs External Benchmarking

Process benchmarking
Example: Delivery process, Billing process
Performance benchmarking
Features of products and services e.g.
mileage, download speed
Strategic benchmarking
How companies compete
Internal Benchmarking
Easy access to sensitive information
Less time and resources required
Limited gain because internal benchmark
might not be the best in class.
External Benchmarking
Just the revise of internal benchmarking
 Benchmarking Process
What function to benchmark (D)
What is the current performance level
(M)
Select the Best-in-Class (M)
Compare (A)
Agree on actions to achieve or beat the
Best-in-Class and Implement (I)
Monitor (C )
Re-do
Benchmarking Challenges
Management support
Alignment with the strategy
Lack of Resources
Right team
A suitable and willing partner
Willingness to change

Performance Measures Balanced Scorecard

Metrics to measure performance By Robert S.Kaplan and David P. Norton
Commonly used performance measures Four perspectives
for outsiders are financial Financial
Internal metrics include performance Customer
levels Internal Business Processes
Process yield Learning and Growth
Defect rate
Average time to answer a call
Schedule
 Balanced Scorecard Leading vs Lagging Indicators
Lagging are easy to measure
Lagging are post event (output)
Leading are predictive measures (inputs)
Leading indicators are not guaranteed
and are the difficult to decide, which
one to select.
Mix of both leading and lagging is good.

Common Financial Measures Return on Investment

$2,000
Return on Investment
Payback Period
Net Present Value
$1,000 $1,000 $1,000 $1,000 $1,000
Internal Rate of Return
Benefit/Cost Ratio Return on investment =

Income x 100%
Cost
 Payback Period Net Present Value
$2,000 $2,000

$1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Cost of Capital = 10%

Time to recover the investment

Net Present Value Internal Rate of Return

$2,000 $2,000

$2,500 $2,500

Cost of Capital = 10% Cost of Capital = 10%

 Benefit/Cost Ratio
$2,000

$1,000 $1,000 $1,000 $1,000 $1,000

Cost of Capital = 10%