Many organizations have started to add benchmarking as a mandatory line item in their annual budgets and outsourcing contracts. Several factors are driving this trend.
The first is return on investment (ROI). As a veteran of more than 4,000 IT service and support benchmarks and more than 28 years in the industry, I can tell you that there are very few investments in IT that can compete with the demonstrated ROI of benchmarking.
Second, there is a virtual one-to-one correspondence between IT service and support organizations that benchmark annually and those that achieve world-class performance.
But that’s not all. IT service and support organizations that benchmark can expect to see at least five business benefits. Here's an in-depth look at each of them.
1. Reduction in total cost of ownership
Understanding the cost/quality tradeoff is the most critical step toward optimizing your support model. Drive your costs too low, and you risk sacrificing the quality of service. Conversely, if you push quality too high (yes, that's possible), you'll drive your costs through the roof.
Benchmarking identifies cost-reduction strategies that do not affect the quality of service. In fact, some of these strategies, such as improving the channel mix, can actually increase customer satisfaction while simultaneously reducing your costs.
As an example, recent benchmarks of IT service and support organizations at my company show that 21% of all tickets resolved by desktop support could have, and should have, been resolved by the Level-1 service desk instead. These escalation errors represent defects in the support process and result in increased support costs that often go unnoticed because they are rarely tracked. So how do we minimize these defects?
One possibility is to insist upon a strict single-point-of-contact (SPOC) support model. SPOC minimizes percent resolved Level 1 capable and ensures that all customer incidents and service requests go through the service desk instead. Percent resolved level 1 capable is simply the percentage of tickets resolved by desktop support that could have been resolved by the level 1 service desk.
Support organizations following a strict SPOC model average 12.2% for percent resolved level 1 capable, while those that do not follow a strict SPOC model are more than double that, at 25.3%.
2. Returned productive hours to end users
According to a recent study by MetricNet, knowledge workers lose an average of 33 hours of productive time per year due to IT outages, breakdowns, and hardware and software failures. Top-quartile performers average about half of that (17 hours per year), and bottom-quartile performers average significantly higher (47 productive hours lost per year).
To illustrate the importance of this, here's a case study example. The data is real, but I've omitted the company name.
We know from benchmarks that insurance company XYZ is a top-quartile performer in service and support. We also know from our study that the difference in lost productivity between a top-quartile and an average performer is about 16 hours per user per year. (That breaks down to 33 hours of lost productivity for an average company and 17 hours of lost productivity for a top-quartile performer.)
When multiplied by 8,650 end users, we estimate total labor savings of 138,400 hours per year (16 hours per year saved times 8,650 users). The average work year has about 1,700 productive hours in it per full-time equivalent (FTE), so this labor savings is the equivalent of 81 FTEs (138,400 hours per year saved divided by 1,700 work hours per FTE per year).
Finally, we know that the company's average cost per employee is $79,300, including salary and benefits. The economic value of being a top-quartile support group is therefore about $6.4 million annually (81 FTEs times $79,300).
3. Improved customer satisfaction
In any service delivery organization, quality of service, as measured by customer satisfaction, is critically important. Customer satisfaction is a measure of how effectively a support organization conducts its business. However, any discussion of customer satisfaction must take place in the context of cost.
Customer satisfaction and cost per ticket are the yin and yang of a service organization. These metrics are in constant tension, and every service organization grapples with how to strike an appropriate balance between the two.
With no restraints on spending, it is relatively easy for a service desk to spend its way to high customer satisfaction. Conversely, if customer satisfaction is not an issue, a service desk can reduce its costs almost indefinitely.
Every support organization does, of course, operate with both spending limitations and quality standards. The objective, therefore, is to achieve the highest possible quality within the budgetary constraints placed on an organization.
For example, some service desks that operate under severe budgetary restrictions are doing quite well when they achieve a 75% customer satisfaction score. By contrast, a service desk with a relatively generous budget that achieves an 85% customer satisfaction score may not be doing so well, despite having a higher absolute customer satisfaction score.
The point is that cost matters, and you must interpret customer satisfaction in light of the spending constraints under which your service organization operates. Benchmarking does that for you.
4. Demonstrable ROI
Think of yourself as the owner of a profitable business that deserves to be funded at a level commensurate with the return produced by the business. Most companies, business units, and departments track ROI on an ongoing basis and use this metric not only to make intelligent investment decisions, but also to justify their very existence. Yet fewer than 10% of all technical support organizations can effectively demonstrate their ROI.
The underlying benchmarking metrics that make it possible to calculate the ROI of support include first-level resolution rate, tickets eliminated through root-cause analysis, and productive hours returned to end users.
If you believe that additional head count, technology, training, or any other investment is needed to empower your support organization to deliver the best possible service, you should ask for it—no, you should demand it! But you should do so armed with the knowledge—and proof—that your support organization is producing a positive ROI for the enterprise.
5. World-class performance
There are four criteria to achieve world-class performance in IT service and support:
- High customer satisfaction, and specifically top-quartile customer satisfaction relative to a peer group of support organizations comparable to your own
- Low cost per ticket, specifically bottom-quartile cost per ticket relative to a comparable peer group
- Industry best practices that are integrated into the support organization
- A support organization that produces a measurable ROI of greater than 100%
One note on valid peer group comparisons: I’m often asked how "internal benchmarking" differs from peer group benchmarking. The simple answer is that it's really not benchmarking at all. Internal benchmarking is nothing more than setting individual performance targets and trending performance over time.
IT service and support organizations can improve overall performance based on internal benchmarks alone but will eventually experience diminishing returns in their improvement efforts unless they look outside their own organizations.
It is in comparing themselves to peers that they can put their results into context and begin to experience breakthrough improvements. For example, a support organization may take pride in reducing its cost per ticket by 10% but not realize that its peers are 30% lower in cost. Dynamic Peer Group Selection can ensure the validity of benchmarking comparison groups.
Make your case
The most common challenge I hear from IT service and support professionals is that they are viewed as a cost center and can't make the business case to secure the funding and head count needed to serve their customers.
If that sounds familiar, and if you are looking for a way to rapidly transform from a cost-centric operating model to a value-centric operating model, benchmarking is the answer.
Benchmarking allows IT service and support organizations to quantify their performance, compare their performance to others in their industry, identify performance gaps, define the actions necessary to close the gap, develop a compelling value proposition, and, ultimately achieve world-class performance.
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