Benchmarking

Review of Gartner case study

Date: 24-06 06-2011 Guide: Udo Fehlings

Word Count : 1467

MBA IBC SS2011, Gengenbach Hochschule Offenburg

Rakesh G.R 173078 Mrudula Savadasari - 172712

Benchmarking

A new Approach to Gartner Case

Table of Contents
1. 2. 3. 4. Introduction ........................................................................................................................................... 3 AS - IS situation ...................................................................................................................................... 3 Why Benchmarking?.............................................................................................................................. 3 Approach ............................................................................................................................................... 4 4.1 4.2 5. 6. 7. 8. 9. 10. 11. 12. Internal Benchmarking Stages .................................................................................................... 4 External Benchmarking .................................................................................................................. 5

RACI Matrix for Benchmarking Activities............................................................................................... 5 Process Flow chart: Summary ............................................................................................................... 6 Prioritisation of key internal process Illustration ............................................................................... 6 PDCA approach ...................................................................................................................................... 7 Cost evaluation for prioritised processes An illustration ................................................................... 8 Burke-Litwin Change Model .............................................................................................................. 9 Conclusions & Recommendations ................................................................................................... 10 References ....................................................................................................................................... 11

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Benchmarking

A new Approach to Gartner Case

1. Introduction
A data centre is a facility used to house computer systems and associated components, such as telecommunications and storage systems. It generally includes redundant or backup power supplies, redundant data communications connections, environmental controls and security devices. Globalisation & rapid growth in networking & IT has led companies to setup many such data centres in regional markets. One such company XYZ which owns data centres in many regional markets had approached Gartner for its performance measurement & improvement of its operations. Despite regular internal benchmarking, company XYZ felt that benchmarking by an independent organisation will lead to acceptable results by internal or external customers & hence it approached Gartner. Gartners approach was to do benchmarking in all its regional data centres simultaneously. Though the approach yielded good results, such projects are not universally desirable. We, in this report, as an external consultant to Gartner would like to propose a new approach for its further implementations.

2. AS - IS situation
Company XYZ has regional data centres all over Europe They are continuously under pressure to deliver efficient & high quality service to their customers The company insists an external organisation for its benchmarking project to reflect its abilities throughout the entire organisation

3. Why Benchmarking?
To assess & improve performance of their diversified regional operations against competitors, company XYZ has chosen benchmarking. The advantages & limitations for company XYZ is analysed using SWOT approach
Strengths > Prior experience in internal benchmarking > Top management support & commitment > High level of standardisation in opeartional & technological among different data centre Weakness > Only Internal benchmarking may not give an idea over the best in class industry requirements > Constant pressure to demonstrate their efficienct services > Complexities of data centres for measurement & comparision

SWOT
Oppurtunities > To measure & improve diversified regional operations > To have a competative advantage & become market leaders > Strategies for changes can be identified Threats > Resistance to changes > Implied terms of confidentiality due to benchmarking > Breach of competation law

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Benchmarking

A new Approach to Gartner Case

4. Approach
We would like to have a staggered approach for the benchmarking project & this would be done in 2 phases Phase 1: Internal Benchmarking Select any 1 regional data centre as a pilot project to benchmark Identify the best practices for different processes followed in other regional data centres & map the same in the selected data centre Phase 2: External Benchmarking The selected data centre with all the improvements in phase 1, will be benchmarked with the external best in class partner Performance gaps are identified & improvement plans can be implemented accordingly After the Phase 2 roll out, based on the results, the same can be deployed horizontally across all other data centres 4.1 Internal Benchmarking Stages Internal benchmarking is looking at the differing levels of performance within an own organisation and highlighting best practice for dissemination to other parts. For example, if an organisation has several plants making the same goods, then it can analyse the best performing areas in each and then extrapolate these features to its other plants thus bringing all operations up to the best internal levels of operation. Objectives: To develop the identified data centre as benchmark by pooling best practices of different regional data centres within the organisation Implementation of internal benchmarking is done In 2 stages Starting phase: In this stage, before benchmarking, we will identify what to compare. Diagnostic benchmarking is applied to explore the relative performance of different functions in the regional data centres. A benchmarking team is setup to rate the data centres based on certain performance criteria. Best practices are identified & listed among different regional data centres. Stages of benchmarking
Top class Process Holistic Diagnostic

Starting

On the way

Mature

Holistic phase: Based on the best practices in the starting phase, key areas for improvement are identified & necessary improvements are made within the selected pilot data centre. It also involves in examining the totality of the system. Both qualitative & quantitative aspects are examined based on the performance measures (KPIs) set for the data centres.

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Benchmarking

A new Approach to Gartner Case

External Benchmarking Mature phase: In this stage, processes of the pilot data centre are compared with the external benchmarking partner. Performance gap is established & elements which have led to superior performances are understood. On this basis, improvement plans are implemented. List of activities for benchmarking are as below 1. To identify core competencies, and map company objectives 2. Select the data centre (pilot project) & its internal processes to benchmark 3. Select a benchmarking team leader (1 from headquarter & 1 from the pilot data centre, preferably a local language speaking, regional) and teams (process owners to be involved) 4. Establish the data collection method & develop a preliminary questionnaire 5. Rate the processes of different regional data centres based on performance criteria 6. Earmark the best practices from different data centres 7. Map the existing process of the pilot data centre & compare the same with best practices of other regional data centres 8. Adapt the best practices wherever applicable in the pilot data centre 9. Now identify the best in class external partner to benchmark with the pilot data centre 10. Identify the performance gaps in the processes 11. Implement the improvements wherever applicable 12. Examine the results, trends based on the improvements of the pilot data centre 13. Communicate, Influence & train the people of new changes 14. Horizontal deployment of the processes to other regional data centres

4.2

5. RACI Matrix for Benchmarking Activities

Activity NO 1 2 3 4 5 6 Activities Identify core competencies Select the data centre (pilot project) Select a benchmarking team leader and teams Develop a questionnaire Rate the processes Earmark the best practices from different data centres Map the existing process & compare Adapt the best practices wherever applicable Identify the best in class external partner to benchmark Identify the performance gaps Implement the improvements Horizontal deployment of the processes to other regional data centres Manager HQ Benchmark TL - HQ Benchmark TLpilot DC Team members Process owners

A,R A,R A,R I A C I I C I I A

C C C A R A C C A C C R

C C C C C R C A R A A I

I I I R C C R C I R C C

I I I I I I A R I C R C

7 8 9 10 11 14

R Responsible

A Accountable

C Communicated

I Informed

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Benchmarking

A new Approach to Gartner Case

6. Process Flow chart: Summary

Sr.Mgmt (HQ) Benchmarking Team Process Owners Stake-Holders / Customers

Select a pilot project

Identify the Best practices (Internal)

Adopt Best practices in the Pilot Project Implement the Improvement Plans

Select benchmarking team

Identify Best-in-class Partner (External)

Identify Performance Gaps

Improved Performance &Customer Satisfaction

No

Check if targets are met

Yes

7. Prioritisation of key internal process Illustration

% Contribution to profit
Cost of cooling resources 14% Personnel Costs 16% Network infrastructu 7% Cost of power 28% Cost Model of typical data centres 45 Energy efficiency 40 35 30 25 20 15 10 5 0 40

Pareto Analysis
88 68 Capacity optimisation Network scalability Sever utilization Surge protection 94 97 99 100

120 100 80 60 40 20 0

Maintainan ce cost 11% Cost of Space 24%

Sources : http://www.hpl.hp.com/techreports/2005/HPL-2005-107R1.pdf ; http://perspectives.mvdirona.com/2010/09/18/OverallDataCenterCosts.aspx

This is an illustration for the identification of internal key processes for benchmarking. We have taken a cost model of typical data centre as an example & prioritized the processes to benchmark. The cost model explains the contribution to costs by different resources of a data centre. Based on these, a pareto is drawn to prioritize the areas of improvement which contributes to increased ROI.

Connectivity

Reliability

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Benchmarking

A new Approach to Gartner Case

8. PDCA approach
PDCA, a widely used TQM tool, helps to plan & implement improvements. Throughout PDCA cycle, benchmarking can be used to investigate data sources to implement improvements. The figure below describes the PDCA approach.

ACT
1. Review the Results. 2. Horizontally deploy across all the other subsidaries/projects. 3. Effective training to employees regarding 'change' for Total Quality 3. Follow the PDCA for Continuous Improvement .

PLAN
1. Plan the milestones for Benchmarking (Centralized Project Plan) 2. Create a checklist to to select the processess for benchmarking based on company's Objectives. 3. Create a list of Critical Success factors to be Benchmarked. 4. Criteria Matrix to select Benchmarking Partners. 5. Plan & steer the implementation of Changes

CHECK
1. Improve the Performance gaps identified in all the processess. 2. Check the results and analyse the trends. 3. Verify whether defined target measures are achieved. (say costefficiency, Internal and external Customer satisfaction, Innovation)

DO
1. Set-up a Benchmarking team for all subsidaries 2. Roles and responsibilities should be clear & communicated (RACI Matrix) 3. Implement all the Bestpractices (internal benchmarking) in pilot project. 4. Do the Benchmarking between the Pilot Project and Best-in-class partner(External) 5. Doccumentation of the process and communicate to Customers and Users.

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Benchmarking

A new Approach to Gartner Case

9. Cost evaluation for prioritised processes An illustration

Based on the Pareto analysis, we have identified the key processes to be improved & below is an illustration of action plan along with cost evaluation for improvement of the same.

As per the pareto, improvements have been planned in key areas such as energy, sever & capacity utilization. The process owners are identified for each improvement. Also, Gain v/s cost effort is mapped to see whether the project identified yields profit. As per the graph, a profit of 400 T is set as a target from these benchmarking projects & projects that yield profit around 425 T starting from 2011 upto 2012 are identified.

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Benchmarking

A new Approach to Gartner Case

10.

Burke-Litwin Change Model

Benchmarking is a powerful tool in the quest for continuous improvement & performance breakthrough. The improvement of performance gaps, not only yield benefits but also leads to organisational changes. The Burke-Litwin model has been developed to examine organisational change & performance. It provides a link between an assessment of the wider institutional context and the nature & process of change within an organisation.

External Environment Rapid growth of Int.commerce Improvements in networking Complexity of data centres

Mission & Strategy Cost efficient service to its customers Speedier introduction of newer technologies

Leadership Senior management commitment & sponsorship Awareness of project scope to everyone-Visibility

Culture Transparency in communication People Involvement & customer focus

Structure Top down decision making Function based structure focusing on responsibility

Management Practice Centralized project management Regular meeting to establish consistent project

System Reliable & secured systems Flexible & scalable systems

Work Unit Climate Review best practices & decisions based on facts Holistic view of processes

Tasks & Ind. Skills IT knowledge Facilities management, storage optimisation, securities expertise

Motivation Recognition of good work Rewards or benefits to retain best people

Individual needs & values 100% commitment Focus on continuous improvement

Ind. & Org performance Cost efficient service High service level to its customers

The above model explains the holistic situation of the company after potential changes due to benchmarking.

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Benchmarking

A new Approach to Gartner Case

11.

Conclusions & Recommendations

Benchmarking is an excellent tool to understand and evaluate the current position of an organisation in relation to "best practice" and to identify areas and means of performance improvement. However for an effective implementation, it is always better to select a pilot project to benchmark, study the results & then implement across the whole company than doing simultaneous multiple benchmarking. In one sentence Benchmarking can be concluded as Benchmarking is a systematic approach to identifying the benchmark, comparing yourself to the benchmark, and identifying practices that enable you to become the new best-in-class. - Jac Fitz-Enz, Benchmarking Staff Performance: How staff
departments can enhance their value to the customer

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Benchmarking

A new Approach to Gartner Case

12.

References

http://www2.hec.ca/en/cicma/centre/benchmarking/en_chaire_analysecomparative_cequonendit.html http://www.referenceforbusiness.com/encyclopedia/Assem-Braz/Benchmarking.html http://www.bukisa.com/articles/361773_top-ten-management-on-benchmarking-an-overview-of-how-toidentify-best-practices-and-avoid-being-the-benchwarmer http://www.qualitydigest.com/feb/benchmrk.html http://www.cii-iq.in/CII-Exim%20Bank%20Award%20for%20Excellence.htm

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