Last October the Sydney Morning Herald published some revealing insights into the employment costs of a decade of economic restructuring. Drawing on research from the University of Southern Queensland the paper showed that between 1986 and 1996 Australia lost over 3.3 million full-time jobs. Over one million of these were described as "white collar" positions. As such, when people ask me what I see as the predominant concern of CIOs, I always answer job security. We live in an age when there is none.
With IDC's research showing that local companies spend over 2 per cent of their turnover on IT, CIOs are well aware that their performance is constantly under the microscope. To compound matters is the growing propensity of executives to consider outsourcing. In fact, recent research by PA Consulting projected that by 2002 outsourcers will handle 49 per cent of Australian IT operations, up from 27 per cent in 1997.
Given this backdrop, it's not surprising that operational benchmarking remains one of the most favoured topics for InTEP members. Each February I ask members of the Forum to vote on what topics they would like as briefing sessions in the year ahead; each year operational benchmarking is in the top three. CIOs clearly recognise that unless there is some objective measurement of their performance, relative to industry average and best practice, they run the risk of being subjectively assessed by their executive. This in turn makes them vulnerable to ill-informed and emotional judgements.
IDC has included questions on operational benchmarking in each of its last three "Forecast for Management" surveys. Respondents have been asked to identify what aspects of their IT operations they benchmark. Results revealed that by far the most likely areas were whether projects were delivered on time and on budget as well as customer satisfaction with IS service.
Significantly, the study showed that large companies, with over $250 million in annual revenues, were more likely to utilise benchmarking. Perhaps this reflects that the political challenges facing CIOs in these organisations are far greater. As such, an objective measurement of the performance of the CIO is more important. However, a surprising insight from responses was that the industry sector least likely to utilise operational benchmarking was the Public Sector. This would seem to indicate that the IT outsourcing demagogues currently afflicting the Australian Public Sector are putting the cart before the horse. Maybe if they had first gauged the performance of IS through a benchmark, before electing to outsource, some of the current Canberra calamities could have been avoided.
Benchmarking was the topic for a recent Melbourne session of InTEP. The speaker made no bones about the reasons for undertaking a benchmark. The company was implementing a comprehensive integrated system and this was straining the resources of IS. He saw the outsourcing clouds on the horizon and wanted hard facts about the performance and cost of IS before these discussions were too advanced.
He was clearly glad he did. The study identified a number of activities which impacted the effectiveness of IS. In particular, a lack of standards, especially at the desktop, meant that the company was squandering support resources. As a result, its support costs were significantly more expensive than the best practise organisations it was compared against. However, the analysis identified that the organisation should in fact allocate more resources to IS support. The best practise organisations in the database spent twice as much on support as compared to the average companies. In effect this investment had successfully eliminated the costly and ineffective amateur support of business colleagues. The evidence of the benchmark gave IS the argument to both establish a standard desktop operating environment and to invest more in IS support.
The CIO feels the benchmarking exercise helped him identify where in the IS operations he can lift performance. He also has a true understanding of his department's total operational costs. The outsourcing wolves may still be at his door, but this CIO is now very well placed to judge their promises against his existing reality.
Peter Hind is the manager of User Programs, which includes InTEP, at IDC Australia
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