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IT-Benchmarking
 

IT-Benchmarking

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IT benchmarking (the comparison of your IT costs and IT services) with market leaders or other companies of your own industry or maybe a foreign sector can be a valuable management tool. Its ...

IT benchmarking (the comparison of your IT costs and IT services) with market leaders or other companies of your own industry or maybe a foreign sector can be a valuable management tool. Its effectiveness, though, depends on the quality of your database and how professional the benchmark is conducted.

Lexta is a leader in IT benchmarking and offers a deeper look into its practices and experiences in the field of IT benchmarkings

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    IT-Benchmarking IT-Benchmarking Presentation Transcript

    • Competence in IT Management IT Benchmarking Berlin, March 2012 © Copyright LEXTA GmbH 2012This document is for authorised staff only. Distribution, citation, or copying – whether in extracts or all parts – is not allowed without written affirmation of the LEXTA GmbH.The enclosed texts and graphics have been used as part of a presentation; they do not cover the event in the sense of a complete documentation.
    • IT management topics from benchmarking, cost reduction, sourcing and strategyto securityCIRCLE OF IT-MANAGEMENT IT Benchmarking • Prices • Costs • Operation of applications • Studies of market price development IT Security IT Cost Reduction • Benchmarking IT security • Cost benefit analysis • IT cost-reduction levers • Documentation and certification • Platform operation • Data protection • Office communication • Operation of applications • IT projects / development IT Strategy • IT health check • IT strategy • IT key figure systems IT Sourcing • IT governance • Make-or-buy • IT Benefit calculation • Sourcing strategy • IT organisation • IT service catalogue / SLAs • IT skills • Price models • Telephony strategy Marketing for CIO • Tendering / negotiations and IT sections • ContractSource: LEXTA Slide 1
    • The key to long-term success is superiority. Benchmarking is an essential tool – if one knows how to handle it
    • Standardisation is the key in IT managementLAYERS OF THE CREATION OF ADDED VALUE IN IT Plan Build Operate Support Individual applications Standard applications (e.g. SAP/ERP) Databases (e.g. Oracle) Operating systems (e.g. UNIX, Windows) Hardware (Processors, storage, network) Data centre facilities (Building, air conditioning etc.) = Standard IT Benchmarking = Cost estimate (ProBIT) = Application benchmarkingSource: LEXTA Slide 3
    • IT benchmarkings should apply clearly defined categories.TYPICAL BENCHMARKING CATEGORIES Operation of standard applications (SAP w/ IS-x) Thin Client LAN VDI Desktop Client PC Laptop Data centre LAN Archives, back-up and restore Web-based services / ports Server Application development PDAs Office communication Output Management Service desk / UHD WLAN Application usage Standard software Databases Network services Networks Storage Server Printer (e.g., DNS, DHCP) Communication Internet access (e.g., e-mail) (including firewall) Basic services (e.g., ADS) VPN (RAS) Software distri- bution / antivirus Virtual Server File & print Telephony services Other peripherals WAN General expensesSource: LEXTA Slide 4
    • Technically oriented IT benchmarking differs from business orientedbenchmarkingIT BENCHMARKING APPROACHBenchmarking approach Procedure Results • Identify current IT costs (cost type • Trend statement concerning IT costs, and cost unit) based on intra-industry comparison • Establish "golf course" indicators • Indicator for adequacy of user require- Business- such as: ments oriented - IT costs related to turnover • Limited consideration of quality benchmarking - IT costs per user / employee standards, functional complexity and - IT costs per subscriber, etc. company specific characteristics IT Cost benchmarking • Analyse the complete IT services • Positioning within a ranking spectrum and identify standard • Transparent conclusion concerning services the backlog to IT service providers • Calculate actual IT costs and with excellent cost / service position Technically project them onto all standard IT (“lessons learned”) oriented services • Reliable identification of levers for benchmarking • Compare to recent data from cost reductions and the associated around 100 benchmarking partners potential savings • Data have been collected and verifiedSource: LEXTA Slide 5
    • The ideal IT benchmarking procedure is conducted in six phasesIT BENCHMARKING PROCEDUREPhases: 1. Preparation 2. Collection of 3. Generation of 4. Selection of 5. Execution of 6. Definition of initial data comparability peer group benchmarking leversContents: • Kick-off • Collect • Ensure • Define selection • Calculate • Identify causes information on comparability of of differences • Select IT services criteria for peer costs per IT contact person service portfolio, groups service from quantity • Consider SLA competitors • Classify service criteria • Select inner and • Identify modules structures, outer peer ranking in • Audit SLA’s, contract • Scale client groups as comparison to overheads • Scheduling and cost and data to parameters of reference competitors • Define levers pricing structure groups comparable • Show costs in • Analyse systems • Ensure clarity of comparison to overheads compara- peer groups • Research bility and specific restrictions regulations of companyResults: • Project • Report on • Report on • Peer group • Benchmarking • Improvement framework current improvement selected results potential situation factors • Overview of leversSource: LEXTA Slide 6
    • BITKOM’s extensive benchmarking standards …CONFORMITY WITH BITKOM BENCHMARKING STANDARDS (1 OF 2) Methodical competence Experience • Standardised approach towards data collection and analysis • Methodical competence in data collection, measurement • Identification and quantification of cost drivers and comparison • Verification of data and procedures to identify possible • Seniority, experience and availability (continuity) of inconsistencies and gaps the person responsible for benchmarking • Substantial references from benchmarking projects Principles and code of conduct Provision of a comprehensive and up-to-date database • Open and fair conduct • Coverage of all service constituents • Observation of legality and confidentiality in data handling • Coverage of service range and quality • Comprehensive and truthful data collection • Up-to-date data (< 15 months) • Conformity with schedules and milestones • Database granularity with regard to service depth • Continuity of project team • Own database • Target oriented preparation and execution of project meetings • First-hand data collection • Data quality assurance • Uniform and standardised services • Frequent updates • Geographical coverageSource: BITKOM Slide 7
    • … should always be covered when performing IT benchmarkingCONFORMITY WITH BITKOM BENCHMARKING STANDARDS (2 OF 2) Data collection and analysis Complete compilation of all price-influencing parameters • Compilation of technical performance indicators • Service specifications • Collection of service quality data, with particular focus on • Quality cost drivers • Complexity • Recording of the individual company setting • Volumes / amounts • Recording of governance and business processes X • Contract duration • Creation of peer groups • Special arrangements • Development of categories based on the SLA’s and / or services • Assessment of special financial items (e.g., asset or Presentation of results human resource transfers, “cosmetic“ pricing adjustments, risk spreading) • Display market conformity of the results • Data standardisation using price deductions and • Display of the best in class results premiums • Extensive presentation of the results • Transparent standardisation • Comparison within the same industry branch Project organisation • Comparison with other industries • Peer group sample size (>= 6) • Application of a three-layered organisational model • Indicator analysis (steering committee, project management and team) • Derivation of levers • Organisation of data collection workshops and coachings • Clear and tangible results • Realistic project planning • Proof of experience through existing referencesSource: BITKOM Slide 8
    • A server benchmark consists of approximately 70 detailed checkpointsOVERVIEW CHECKPOINTS FOR SERVER BENCHMARK Hardware provision Software provision Infrastructure data centre • Procurement • Procurement • Supply: Power • Financing • Capacity costs (calc. interest) • Supply: Climate (Air conditioning) • Capacity costs (calc. interest) • Capacity costs (amortisation) • Supply: Facility • Capacity costs (amortisation) • Guarantee • Supply: Physical security • Guarantee • Licence management • Supply: Network infrastructure • Delivery and interim storage • Automatic installation • Supply: Rack • Transport to place of installation • Manual installation Administration • Setup at the place of installation • Basic configuration (standard) • Connection to infrastructure • Basic configuration (individual) • Operating system service • First briefing • First briefing • Auxiliary services • Initial tests • Test • Network service • Inventory • Fax service Hardware relocation Software relocation • Printer service • File service • Dismounting / Installation • Re-installation • E-mail service • Transport (incl. packaging) • Re-configuration • Internet service • Monitoring • RAS Service Hardware maintenance • Inventory • Backup service (if “stand alone benchmark") • Monitoring • Reporting • Restore service (if “stand alone benchmark") • Reporting • Update (patch) • Recovery test (if “stand alone benchmark") • Preparation for technical refresh • Update (minor release change) • Application service • Execution of technical refresh • Update (major release change) • Firewall service • Maintenance • Security service Hardware decommissioning Software decommissioning User help desk • “Sundown” • “Sundown” • Help desk • Dismounting • Deinstallation Documentation • Storage • Transport • Operations manual (Run book) • Disposal • Problem solution databaseSource: LEXTA Slide 9
    • The different service levels are projected onto a reference modelPHASE 3: COMPARISON OF SERVICE CLASSES Client Reference model Criteria Service Service level Criteria Service class Service level class Core time Flexible time Availability 1 99.5 % Availability Very high 99.5 % to 99.999 % 2 97.5 % High 97.5 % < x < 99.5 % 3 95.0 % Medium 95.0 % < x < 97.5 % 4 95.0 % Low < 95.0 % Reaction time 1 15 minutes 60 minutes Reaction time 2 15 minutes 60 minutes Not considered because usually not a cost driver 3 15 minutes 60 minutes 4 60 minutes 240 minutes Maximum Very high 1 to 2 hours Maximum 1 2 hours 2 hours downtime High 4 hours per case; 15 downtime hours per year 2 4 hours 5 hours Medium 4 to 8 hours; 24 hours 3 4 hours 5 hours per year 4 8 hours 10 hours Low 8 to 10 hours; 48 hours per yearSource: LEXTA Slide 10
    • With established comparability the benchmarking participants’ information isnormalised on one reference modelPHASE 3: APPROACH TO NORMALISATION 1. Normalisation of the benchmarking 2. Pricing and cost comparison of 3. Reverse calculation of the target on the reference model the benchmarked company percentage differences in price with selected, normalised peer / cost to the peer companies companies Reference modelPeer company 1 Client company Normalisation NormalisationPeer company 2 Normalised data of peer companiesPeer company n in the benchmarking databaseSource: LEXTA Slide 11
    • The major release updates and the discount granted at the end of each yearcause a decrease in the normalised price for laptopsNORMALISATION OFFICE COMMUNICATION – LAPTOPS BENCHMARK EXAMPLEIn €/laptop * month Normalisation Approach Correction factor Agreed Principle Price per unit requirement (Increase / in Before After decrease) contract normali- normali- sation sation Software update (Major Administration cost for updates -1.8 % Yes Parallel 36.00 33.65 release change) included Backup und restore No normalisation needed due to 0.0 % Yes services client server-based profiles Short-term lending of Prices for pool laptops, 1 unit -1.1 % No laptop clients per 50 clients, calculation basis 50 % due to goodwill regulation Insurance against damage Insurance rate -0.6 % Yes by electricity and theft Year-end discount Three per cent on the price -3.0 % NoSource: LEXTA Slide 12
    • Benchmarking results are compared to an inner and an outer peer groupPHASE 4: BENCHMARKING PEER GROUPS (1 OF 2)Inner peer group Outer peer group• Comparison is restricted to • Comparison is extended to companies with directly companies with only limited comparable IT operations comparability in the conditions of IT operations – Same industry – Same / comparable – Comparable relevant industry volumes – Comparable complexity – Comparable relevant volumes of requirements Inner Outer – Complexity of require- – Comparable service ments is not considered levels – Service levels are not• Trend statement regarding considered competitiveness of cost performance ratio under the • Assessment whether given conditions requirements are typical for the industry• Identification of the best in class • Identification of the best in practiceSource: LEXTA Slide 13
    • Inner and outer peer groups are selected on the basis of quantitative andqualitative criteria Other relevant criteria include: Structure ofPHASE 4: SELECTION OF PEER GROUP (2 OF 2) service portfolios, service ILLUSTRATIVE level agreements, availability, etc. No. Peer group Company Turnover in Number of Number of Number of custo- million EUR employees workstations mers in thousand Client 611 1,019 1,187 0.700 1 Inner Company 1 2,229 3,200 4,073 1.200 2 Company 2 2,755 4,400 3,549 1,800 3 Company 3 1,034 2,100 2,317 1.250 4 Company 4 1,840 2,808 2.480 1.300 5 Company 5 1,939 5,753 4.496 0.400 6 Company 6 225 835 857 0.300 7 Company 7 180 396 451 0.200 8 Company 8 771 6,700 4,800 0.035 9 Company 9 494 660 622 0.300 10 Outer Company 10 4,100 9,000 10,027 26,300 11 Company 11 46,400 66,549 > 25,000 12,400 12 Company 12 613 2,341 Unknown Unknown 13 Company 13 104 281 400 0.100 14 Company 14 113 243 400 Unknown 15 Company 15 2,248 5,602 3,751 Unknown 16 Company 16 181 305 639 0.200Source: LEXTA Slide 14
    • Company-Profile-Lexta-V66-MAS-120103.pptThe prices per GB storage are approximately 17 percent above the marketaveragePHASE 5: BENCHMARKING RESULTS – STORAGE ILLUSTRATIVEin EUR per GB per month Prices Prices peer group 4.86 + 17 % 4.00 3.70 3.78 2.98 3.05 2.75 0.23 2.67 2.83 2.42 Ø 2.54 1.77 1.61 1.65 1.73 1st Quartile 1.65 0.98 0.56 Energy industry provider, global provider, global Manufacturing, Manufacturing, Manufacturing, Manufacturing, Industry global Industry global Industry global Industry global Industry global Industry global Industry global normalisation normalisation Correction IT Service IT Service Europe Europe Europe Europe Before global factor AfterSource: LEXTA Slide 15
    • Saving potential can be created by standardising the product portfolioand optimising existing processesPHASE 6: POTENTIAL LEVERS PROJECT EXAMPLE No. Lever Conditions for implementation / remarks 1 Completion of contracts by introducing service levels for services hitherto delivered • Agreement / involvement of customer without contractual basis and decided quality • Ca. 25 TEUR p. a. 2 Standardisation of laptop clients to one or two models • Ca. 100 TEUR p. a. 3 User-based allocation of costs for non-standard services • Implementation of lever 1 • If necessary, implementation of lever 2 4 Introduction of thin clients instead of fat clients to reduce theft and to prevent • Agreement / involvement of customer expensive service at small-sized locations (with max. three PCs) • Extension of backend • Ca. 70 TEUR p. a. 5 File service: Implementation of quotas • Agreement / involvement of customer • User acceptance • Ca. 20 TEUR p. a. 6 Mail service: Implementation of quotas, if necessary along with a centrally • Agreement / involvement of customer managed archive • User acceptance 7 Review of product portfolio and contracts for standard software • Agreement / involvement of customer • Ca. 15 TEUR p. a. 8 Optimisation of deployment and service processes by stronger integration of • Ca. 40 TEUR p. a. hardware manufacturers 9 Review of personnel and processes with regard to automation and efficiency, if • Analysis of details / costs necessary take respective measures • Ca. 25 TEUR p. a.Source: LEXTA Slide 16
    • Benchmarking identifies strengths and weaknesses of a company and thus paves the way to top performance
    • Please contact us for further informationCONTACT DETAILS Dorotheenstraße 37 10117 Berlin Germany http://www.LEXTA.com seidl@lexta.comSource: LEXTA Slide 18