Why benchmark the internal IT function?
Benchmarking provides an up-to-date overview of IT costs in relation to different service areas, and evaluates the costs of the IT function in relation to market prices. This also applies to shared service centres. The market is developing rapidly, standards are constantly changing, and the cost of IT infrastructure services, for one thing, is falling every year. That is why, if you want a real picture of the efficiency of your IT function, you need to keep up to date with the current market pricing of IT services.
When to benchmark internal IT functions?
There are numerous scenarios, in which benchmarking internal IT functions can be useful – ranging from pure strategy to more technological areas. A benchmark of internal IT functions can be implemented in the context of strategic sourcing efforts in order to perceive the difference between the current internal setup and different outsourcing scenarios. It can be conducted at the beginning of a tender process to develop the documentation of the current setup, and to simulate different alternative scenarios and understand the factors driving the costs of the overall agreement.
It is also an ideal tool in organisations that have accrued technical debt in the shape of legacy hardware and short-term or noncoherent solutions, resulting in overstretched IT functions with inefficient platforms and unmanageable system portfolios and a consequent lack of financial overview.
Zangenberg Group has the country’s largest benchmark database of active contracts. A benchmark process reviews the internal IT function and calculates a market price for the work of the IT function at the agreed time, just as if it were engagement with an external provider.
The actual benchmarking process starts with data collection, determining the IT function baseline. This is followed by a mapping of internal IT costs. We adapt the complete mapping of the current IT function to market standards, facilitating normalisation of the services provided. Once normalisation is complete, we validate that data is comparable. We then submit a final benchmarking report containing observations and recommendations.
- Full documentation of the internal IT costs in the Zangenberg Analytics framework, which the market recognises as the leading benchmarking method
- Cost benchmarking compared to market prices, based on data from the past quarter
- Instructions for optimisation measures