Chapter 22: Benchmarking Telecommunications Results

Benchmarking is the process of comparing cost and service indicators with other companies who represent the best practice in the industry.  The key to successful benchmarking is to set standards in cooperation with partners who agree to share information in a mutual quest for continuous improvement.

Steps in benchmarking costs:
·        Determine the objectives and benefits of benchmarking
·        Select benchmarking targets
·        Develop a plan for collecting and summarizing data
·        Select benchmarking partners and share results with them
·        Capitalize on the improvements

·        Learn whether the costs you are paying and services you are delivering are equivalent to others in the industry
·        Learn techniques that other companies use to keep result in line
·        Improve visibility of telecommunications department in the eyes of management
·        Evaluate contracting versus in-house costs and benefits
·        Evaluate your own performance
·        Demonstrate the payback of capital investments
·        Instigate friendly competition

Before you begin benchmarking, develop a clear understanding of how the process works and what your expectations are.  Document the expected benefits in terms of tangible and measurable objectives.

When deciding what to benchmark, look where the money is being spent.  In most companies, the telecommunications budget consists of:
·        Local service costs
·        Long distance and toll-free costs
·        Telecommunications department salaries
·        Equipment maintenance
·        Depreciation
·        Move, add, and change costs

Whether you are evaluating costs or services, remember these keys to successful benchmarking:
·        The benchmarking criteria must be measurable
·        The data must be easy to collect
·        The data must come from a reliable and consistent source
·        You must clearly understand what the numbers include and exclude
·        The result must be worth the effort

Raw cost figures are meaningless by themselves.  They must be converted to ratios for comparison with other companies.  At first, the benchmarking project may be time-consuming and costly in order to collect data from previous months and to develop tools (i.e., forms and spreadsheets) to collect and compare information. Once established, the process becomes part of the bill-processing routine and requires little additional effort.

Selecting Targets

Start by determining what indicators you want to track.  Begin where your results are the weakest and the potential for payback is the highest.  Ideal benchmarking targets have these characteristics:
·        Information is measurable (numeric)
·        Data is easy to collect
·        Result is worth the effort

Administrative Costs

Administrative costs constitute a significant portion of telecommunications expenses and should be targeted for benchmarking.

Choosing Benchmarking Partners

Benchmarking partners can be found through trade associations, professional organizations, or by contacting companies you feel would be ideal partners.  The ideal benchmarking partner will:
·        Be part of a comparable industry
·        Be of comparable size and network complexity
·        Have a similar geographic makeup
·        Be willing to share information

Capitalizing on the Process

The payoff for benchmarking comes from the improvements in cost reduction.  It offers a method of making a genuine improvement for a modest investment of time and money.  It also provides a way for you to tell whether you are reaching your objectives and reducing costs without affecting service.