Benchmarking the organizational benefits of IT

Diderik van WingerdenMay 22, 2008

What is “benchmarking”? Project context: M&I/Partners IT benchmarks Research objective Research framework Exploration of “IT benefits” 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” 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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SpraakAppsWANLANWerkplekICT-mgnt

Project context: M&I/Partners IT benchmarks (3)

Questions from participants: What causes the differences in IT costs levels? Does an organization with a lower IT costs level do better than

an organization with a high level? Or is a higher IT costs level justified when more benefit or

value is delivered to the organization? Now we know our IT costs, but what are the benefits?

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

Research framework

Exploration of “IT benefits”

Support for the organization’s strategy or vision

Long- or short-term viability of the organization

Desire to be seen as innovative

Flatter organizational structureIncreased agility

Better control through improved information

Reduced headcount

Improved turnaround time

Employee self-service

Compatibility with suppliers’ systemsProduction of standard reports

Increased productivity

Differentiate the product

Improved communication and collaboration opportunities

Creation of new industry entry-barriers

Keeping up with competition

Automating of labour-intensive tasks

Transforming an organization fundamentally

Reduction in property costs

Permit new business models

Exploration of “IT benefits” (2)

Direct Indirect

Non-financial

FinancialMea

sura

bilit

y

Causality

Designing the benchmark instrument

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)

EIO: effectiveness of IS

IIO: potential of IT

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Stabilize Disinvest

Association A

Association D

Association C

Empirical study: testing the instrument (3)

Housing Association A Housing Association B

EIA: effectiveness of IS

Conclusions and recommendations Instrument proven useful for housing associations

Extra

Kwaliteit informatievoorziening(gewogen naar bedrijfsbelang)

Potentieel van ICT (gewogen naar bedrijfsbelang)

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10Aggresief investeren Selectief investeren

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

€ 100 / VHE

€ 110 / VHE

€ 120 / VHE

€ 130 / VHE

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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Woningcorporatie A

Woningcorporatie B

Woningcorporatie C

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

Extra (4)