Benchmarking survey 2011

By Michael Burns

In December 2010, we launched our first-ever business process benchmarking survey (see www.camagazine.com/benchmarkingsurvey10). The idea was to give organizations a chance to compare their performance with that of other organizations to expose possible problems and targets for improvement. Given the lack of benchmarking data in Canada, we were sure we could all benefit.

Unfortunately, the survey did not draw enough respondents to provide statistical reliability. But we learned a lot in the process, and have made improvements that we hope will encourage you to participate, if you have not already done so.

First, a few lessons we learned -- or relearned.

There will always be people who try to beat the system. We had a number of respondents who entered bogus data just to see the results. We have fixed this problem by scanning for bogus data and eliminating the results they generate.
For any given metric, the results can change dramatically according to the size of the organization and other factors. For example, the first metric measures the efficiency of general ledger processing as the number of general ledger transactions per full-time equivalent (FTE). A large organization could process 3,000 to 4,000 general ledger transactions a month, while a small company might process only 10 to 50. Also, a large, complex organization might take months to complete the budgeting process, while a small company might take just days or weeks. And imagine the difference in inventory turnover between a company that sells fast food and one that sells high-end automobiles. That is why the benchmark survey tool allows you to compare your organization’s metrics by industry, company size, complexity and region.
Accounting and ERP systems don’t contain some of the data that could be used in the benchmarks. In these cases, you have to decide whether it makes sense to look for the information, depending on the value of knowing the metric. For example, a large organization that processes thousands of transactions each month would stand to gain a lot by being more efficient in its processing and might, for example, make an investment in technology to improve its score if it is in the lower quartile when compared to the benchmark data. But an organization with few transactions each month should focus on other metrics. In the benchmarking survey, you can just indicate a metric as N/A and move on to the ones that matter to you. We don’t agree with the adage that you can’t control what you don’t measure.
Before starting the survey, it helps to know what data you will need. The system will allow you to download the list of metrics in advance so you can have the numbers ready to go.

Now for the changes and improvements we have made since last December.

Simplifying: the first version contained 63 metrics across 15 business processes – too daunting to handle for many organizations, even though you could skip over many of the metrics. We now offer a “light” version with 13 of the most important metrics. You can always switch to the advanced version later.
Expanding the respondent base. The business process benchmark tool will be opened up to other organizations to increase the number of respondents. All organizations will have their own home pages, but they will all share the same statistical database.
Introducing new metrics. We have added manufacturing to the business processes and have included metrics for efficiency (standard labour hours/actual labour hours x 100), timeliness (percentage of production completed on time), quality (percentage of products returned and scrap percentage) and cost (production downtime/total available production time x 100).
Adding accounting/ERP systems to the mix. In addition to comparing your organization by industry, company size, complexity and region, you can see how you compare with other organizations with the same accounting/ERP system as yours.

Despite our best efforts, organizations might have their own reasons for choosing not to participate, with concerns about confidentiality being chief among them. We will release information only in the aggregate and not publish any individual responses. We have also steered clear of financial metrics for revenue and costs. For example, the metric for costs for a certain business process is expressed as a percentage of total costs rather than the costs themselves.

For an expanded version of this article, please visit www.CAmagazine.com/benchmarkingsurvey11. For the survey, visit www.180benchmarks.com/CAmagazine. Please complete it by December 15. As always, suggestions for improvement are welcome.

Michael Burns, MBA, CA.IT, is president of 180 Systems (www.180systems.com), which provides independent consulting services, including business process review, system selection and business case development. Contact 416-485-2200; mburns@180systems.com