Just like their counterparts in the private sector, public and semi-public sector organizations bear the competing responsibilities of serving their stakeholders—in this case, taxpayers—while providing valuable and measurable results in a cost-effective manner. But, without in-depth performance analysis, it is virtually impossible to meet the unique challenge of operating efficiently at all levels of government while delivering customer- and performance-driven services.
While benchmarking has become standard practice for private sector managers looking to improve their operations, public sector Chief Financial Officers, Chief Information Officers and Chief Data Officers are just starting to see benchmarking as a way to identify the right investment opportunities and evaluate costs and budgets. Public sector organizations are looking for innovative ways to improve their performance, and benchmarking has been identified as an effective one.
Despite the fact that benchmarking studies typically target administrative areas like finance, HR and payroll, procurement and IT—and public sector organizations have significant administrative components—benchmarking has not been widely applied to government agencies. The thinking has been that the unique nature of the way public and semi-public agencies are organized and funded prevents them from participating in an apples-to-apples comparison that is the basis of benchmarking.
It’s true that, if public sector organizations don’t share consistent methodology for defining, collecting, cleansing, validating and analyzing data, then any meaningful comparison of performance metrics is futile. But by understanding the comparative cost and quality of operational alternatives, these leaders can make informed decisions and prompt strategic change. While government organizations must invest from within and optimize legacy systems, leaders must still illuminate improvement opportunities – such as digitizing paper-based administrative procedures – and free up funding constraints to make it happen.
A benchmark analysis is a three-step approach to evolutionary improvement. First, understand what you do. Second, increase efficiency and reduce the gap between your current state and the best performers in your class. And thirdly, increase effectiveness and do the right things.
The public and semi-public sector entities that have seen the most success have been those that have advanced their IT performance analysis to improve IT and telecom performance and service offerings and assist their sourcing initiatives, transactions and strategy. The integrated energy company EDF Energy, which is wholly owned by the French government, began conducting benchmarks to help it identify ways to exploit digital opportunities, such as DevOps, software as a service and public and hybrid clouds. “We’ve been conducting cost and price benchmarks from ISG for a number of years as a key input for our digital transformation initiatives. There is no way we could manage our operations without this management tool,” says Vice President of EDF’s IT Shared Services Martine Gouriet.
By regularly benchmarking its performance, EDF has found an innovative management tool that helps set realistic but demanding improvement targets. Conducting contract benchmarks with its main service providers also helps EDF secure important cash savings and ensure prices are adjusted to reflect the current market value.
Depending on an organization’s needs and focus, a benchmark can be applied through a series of lenses — infrastructure, applications, network and telecom and business unit dimensions. Achieving the optimal cost environment for a given public sector concern can deliver early successes that help deliver instant funding for quick wins. The ultimate success of a benchmark analysis is measured by 1) cost optimization and avoidance, 2) better agility and time-to-market, 3) the success of standards and technology roll-outs and 4) tangible business value.
Contact me for more information about how benchmarking can benefit your organization.About the Author
Julien leads ISG’s digital practice in the South Europe and Middle East Region. Having been involved in more than 80 successful engagements in IT performance assessment and sourcing strategy, Julien brings his clients long-term experience and insight that draws from working with ten of ISG’s largest global clients. His tight focus on achieving business objectives makes him a trusted partner clients can rely on to deliver expert guidance and measurable bottom-line results. Julien has recently led a digital transformation strategy for IT, a hybrid-cloud computing solution design and a big data benchmark for major European corporations. He is fluent in French, English, and Italian.