The purpose of benchmarking is to search for and identify best practice in whatever sector with the objective of implementing appropriate best practice and improving performance. Collection of data is not benchmarking, but is an integral step in the benchmarking path to improved performance.
It is important to understand the two key types of benchmarking used:
- Metric Benchmarking: the quantitative measurement of performance against other utilities over time, using Key Performance Indicators, such as those thta are in the IBNET Toolkit;
- Process Benchmarking: the management analysis of a utility’s own business processes and comparison with those of utilities with exemplary performance in those processes.
Metric benchmarking provides the information for the utility to identify those areas where there is an apparent performance gap. It does not usually, unless a very complex data collection exercise has been undertaken, provide an understanding of explanatory factors. Explanatory factors, such as physical characteristics, geography, weather, population, and custom are key to understanding the apparent performance gap, and may add to or diminish that gap, generating a real performance gap. All metric benchmarking data should therefore be treated with a degree of caution and not necessarily taken at face value.
Process benchmarking seeks to utilise the metric benchmarking output as a basis for bridging the apparent performance gap such that best performance is achieved in the selected area. Best performance for your utility may not be best performance as determined by metric benchmarking but rather the best that can be achieved in the particular circumstances and within constraints that exist.
Process benchmarking is the analysis of a utility’s own business processes and comparison with those of organisations with exemplary performance in those processes. To this definition it is important to add… and the adaptation of those processes to the utility’ s own circumstances, and then implementation. Without implementation, ultimately nothing has been achieved. Implementation is thus vital to any benchmarking exercise, and the will to change practices and to implement changes for the good must be present from the commencement of any benchmarking exercise.