Excellence in IT Management and Digitalisation

IT Benchmarking

To produce a benchmark, LEXTA compares the scope and quality of an IT service to its corresponding prices or costs. We draw on extensive market data to analyse deviations and derive a detailed set of optimisation factors. Benchmarking has the capability to achieve a very broad range of goals.

Here are just a few of the issues faced by our customers:

  • Do our service prices reflect market norms?
  • Where could we potentially make savings?
  • Have our processes been designed efficiently?
  • Are we using our budget for the right things in IT security?
  • What is the best metric to use to assess development?

What is IT benchmarking?

LEXTA applies a two-pronged strategy to IT benchmarking, which involves an orientation both on business benchmarking as well as technical benchmarking. For business-oriented benchmarking, we analyse IT costs and identify IT key figures related to business processes. We use these findings to derive trend statements for your IT costs, comparing these to those typical for your industry, as well as preparing a statement on user requirements compared to market practice. For technical benchmarking, we analyse the spectrum of IT services offered and scopes for services that can be standardised, while identifying IT costs and forecasting the same for the standardisable IT services. Once benchmarking is complete, a clear and comprehensible statement can be made about the company’s gap to IT service providers with an excellent price/performance ratio. Cost optimisation factors can also be reliably identified, along with an estimate of their potential.

Frank Baumann explains the LEXTA approach to IT benchmarkingManaging Partner at Lexta GmbH and Managing Director of LEXTA UK Ltd.

Types of
benchmarks

We offer the following benchmarks, depending on the issues you are facing and their associated conditions:

Price benchmark

Comparative overview of contractual IT services and prices vis-à-vis current market data to identify potential savings and assess market conformity

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Cost benchmark

Evaluation of the performance of internal IT compared to the market, on the basis of cost comparisons and analyses of cost structures

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Peer-to-peer benchmark

Benchmark-driven experience sharing within a select group of participants. Market perspective also possible on request, based on comparative values from the LEXTA database

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Process benchmark

Evaluation of process efficiency and determination of productivity with a maturity level analysis. Optimisation strategies can then be derived by a comparison with best-practice approaches

Pfeil zum Kasten im Zentrum

Procedure

IT benchmarking typically takes place in clearly defined categories and is generally carried out in six phases:

Preparation » Status quo analysis » Normalisation » Control group selection » Benchmarking » Identification of optimisation factors

We currently maintain datasets for around 250 companies in our database. For technical benchmarking, LEXTA can draw on recent data from approximately 1,500 individual contracts that include around 50,000 prices and cost ratios.

A LEXTA benchmarking project can be roughly divided into three blocks:


Status quo analysis

This ‘as-is’ analysis uses on-site workshops with LEXTA consultants to collect data on service content, quantities and qualities with the aid of standardised questionnaires that cover a broad range of perspectives.

Specific details of contracts, technologies and customers are determined, as are security requirements, and checked for fitness of purpose in terms of their scope.

At the conclusion of this phase, we have worked with you to clear up any uncertainties and the benchmark is defined in full.

Applying normalisation to ensure comparability

Normalisation applies penalties or bonuses to deviations from the market on the part of the company to be benchmarked. This process is designed to be clear and comprehensible, with the information needed for normalisation being sourced from earlier benchmarks and reflecting market values to enable an objective process of data normalisation.

The minimum basis for selecting the companies to be compared includes scope of supply, service levels and security requirements. Additional criteria like industry focus, geographical location and service relationship can also be agreed.

Quantitative and qualitative comparisons

For a quantitative benchmark, the costs or prices for individual services are compared with the data from the comparison company. A qualitative benchmark report is also prepared, which identifies relevant indicators and optimisation factors for each individual IT service based on the service analysis and quantitative benchmark results. Accordingly, the optimisation factors constitute individual action choices for achieving competitive costs or prices. The report includes indicators and optimisation factors both for the individual components of a service (hardware, software, HR resources), and for IT structures, IT processes and IT procurement, etc.

We are also happy to offer workshops where we work together to identify the options and potential for your business in relation to IT benchmarking. Contact us to find out more.