Benchmarking the organizational benefits of IT

Diderik van Wingerden

Master’s Thesis Economics and ICT

May 22, 2008

What is “benchmarking”? Project context: M&I/Partners IT benchmarks Research objective Designing the benchmark instrument Empirical study: testing the instrument Conclusions and recommendations The next step..

Contents

What is “benchmarking”?

Take “snap-shots” Find “best practices” Identify, measure, compare, analyse and improve Some definitions:

“[..] a process that helps agencies to find high performance levels (benchmarks) in other organizations and learn enough about how they are achieving those levels so the practice or process producing the performance can be applied in one’s own agency.” (Keehley in Nelissen and De Goede 1999)

“The core of benchmarking: learning about your own organization through other organizations.” (Van Eekeren 2003)

Project context: M&I/Partners IT benchmarks

Yearly IT benchmarks for: Housing associations Municipalities Health care

Focus on IT costs: Total Cost of Ownership (TCO)

Also includes simple measurement of: Application functionality IT process maturity

Project context: M&I/Partners IT benchmarks (2)

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Spraak

Apps

WAN

LAN

Werkplek

ICT-mgnt

Research objective

“Develop a practical instrument for an IT benefits benchmark which evaluates the organizational benefits of IT and compares these between organizations.”

Preconditions: Easy to use, limited effort Generally applicable across industries

Designing the benchmark instrument

Designing the benchmark instrument (2)

organization

processes

Information systems

IT infrastructure

generic industry specific

Information Economics

method

Method of Bedell

IT infrastructure method

business process categories

list of information systems

Empirical study: testing the instrument

Qualitative field research: Semi-structured interviews

Interviews with: 6 housing associations 2 municipalities 1 financial service provider 1 international real estate company 3 IT Economics experts

Field test: 3 housing associations

Empirical study: testing the instrument (2)

Housing Association A Housing Association B

EIA: effectiveness of IS

Empirical study: testing the instrument (3)

EIO: effectiveness of IS

IIO: potential of IT

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Association A

Association D

Association C

Conclusions and recommendations

Instrument proven useful for housing associations Application of existing methods in new context Method of Bedell most useful, others less useful Business process and IS model proven in practice

Conclusions and recommendations (2)

Inconclusive on use for municipalities and financial service providers

Not useful for international real estate companies Business Unit level

Complex terminology Data gathering: interpretation and subjectivity Shortcoming in method of Bedell

Conclusions and recommendations (3)

Go for the method of Bedell Overcome shortcoming

Rules and guidelines for data gathering Simplify and improve definitions Integrate with IT costs results Develop and test for other industries Improve calculation and presentation format

The next step..

Apply the instrument in first-off benchmarking round 10 participants Improved version

Extra

Kwaliteit informatievoorziening(gewogen naar bedrijfsbelang)

Potentieel van ICT (gewogen naar bedrijfsbelang)

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Stabiliseren Desinvesteren€ 70 / VHE€ 80 / VHE€ 90 / VHE

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Woningcorporatie A

Woningcorporatie B

Woningcorporatie C

Extra (2)

Extra (3)

ICT-kosten als percentage van de jaaromzet

Potentieel van ICT (gewogen naar bedrijfsbelang)

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1,50 % 2,00 % 2,50 %1,00 %0,50 %

Extra (4)

Typology of IT benefits