How to use benchmarking – properly

Written by on May 6, 2015 in BillingViews, Opinion with 0 Comments

Old-fashioned balance scale with black tea

Benchmarking is a subject that generates boredom and excitement in almost equal measure. For vendors, part of whose job is to stare into the future and figure out what platforms we will need to be able to deliver services, it is probably the former. For operators, it is probably a big part of how they run their business. There will be key indicators that act as targets in every operation, which allow on-going performance analysis.

Benchmarking itself, though, comes in two flavours. The first is where you measure the same thing over time to see whether your processes are becoming more or less efficient. The second, and more useful, is comparative benchmarking, where you compare key performance indicators with peers and competitors in a highly confidential environment.

The most common mistake that companies make when benchmarking is to forget common sense. Benchmarking is an agenda not a blunt instrument. KPIs should very seldom be used in isolation. And line managers should avoid senior managers brandishing KPIs at all costs. Common sense is the most useful tool.

The cost of billing is a classic example of the obsession that can take managers over. Management sees the cost of billing as a huge and inefficient overhead. They go to conferences and watch people discuss this KPI, realise that their cost of billing is too high, rush back to the office and demand that something is done about it. That ‘something’ might well result in more inaccuracy creeping into bills, or might make them less clear. Both might well result in higher than normal call volumes which increases call centre costs. Ultimately this means that the exercise to cut the cost of billing has increased overall costs. A better approach is to work out which KPIs would best illustrate the quality of billing, which is far more useful in identifying the most effective cost of billing.

Examples abound of companies imposing misguided targets based on simplistic KPIs. Calls must be completed within two minutes. Target met, but customers unhappy because their query was not dealt with properly. They were dismissed. Calls must be answered within five seconds. Call centre personnel pick up call and immediately cut it off again. Target met, customers very unhappy.

Benchmarking, in essence, is about finding better practice and implementing it. KPIs are things to be discussed, holistically, and used to fuel the search for better practice. Here is another article on benchmarking and here is a presentation on benchmarking wisdom.

Some sophisticated benchmarkers will go one step further than benchmarking within their own industry. They will compare themselves with companies in industries that are better at certain things. A telecoms company, faced with customers complaining that their instruction manuals were obscure and useless went to a publisher of recipe books, studied the process of creating a simple to use recipe and implemented the knowledge. An airline that needed to improve its turn around time avoided the temptation to see what other airlines were doing to improve and instead went to study the pit stop process of a Formula One team. The fundamental point is that measuring your processes against companies in your own arena will, at best, result in incremental improvements. Measure processes outside your industry and it is entirely possible that you can make step changes in your process improvement. The airline did.

And when it comes to benchmarking and everything to do with it, remember the most important thing is to use common sense in the measurements.

Tags: ,

About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .


If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.