Types of Benchmarking

The objective of benchmarking is to understand and evaluate the current position of an organization in relation to ‘best practices’ and to identify areas for improvement.

A search for ‘best practices’ can take place both inside (internal benchmarking) and outside an organization (external benchmarking). Benchmarking that involves looking for best practices outside an organization, examines how other organizations achieve their performance levels.

Benchmarking involves four key phases: Planning, collection, analysis, and adapting improvements. To be effective, benchmarking must become an integral part of an ongoing improvement process with the purpose of keeping informed of ever-improving best practices. When a senior executive in the business unit prepares the strategic plan, an organization can obtain best results. The senior executive should also be involved in the benchmarking of the project. Following are some of the types of benchmarking:

·         Strategic Benchmarking: Involves understanding and evaluating the current position of the organization in relation to the "best practices" and identifies areas for improvement.

·         Internal Benchmarking: Involves comparing similar operations within the organization. For example, comparing processes of business units located in different areas

·         Competitive Benchmarking: Involves the analysis of competitor processes for a specific product or service. Typically, organizations conduct this type of benchmarking through trade associations or third parties to protect confidentiality.

·         Functional Benchmarking: Involves comparing and improving similar functions or work processes that may be common within an industry.

·         Generic Benchmarking: Involves comparing processes across industries. For example, an insurance company may benchmark a bank loan application process against its insurance claims process

While the processes may appear dissimilar, they both require timely and consistent adjudication.

Types of Benchmarking

The objective of benchmarking is to understand and evaluate the current position of an organization in relation to ‘best practices’ and to identify areas for improvement.

A search for ‘best practices’ can take place both inside (internal benchmarking) and outside an organization (external benchmarking). Benchmarking that involves looking for best practices outside an organization, examines how other organizations achieve their performance levels.

Benchmarking involves four key phases: Planning, collection, analysis, and adapting improvements. To be effective, benchmarking must become an integral part of an ongoing improvement process with the purpose of keeping informed of ever-improving best practices. When a senior executive in the business unit prepares the strategic plan, an organization can obtain best results. The senior executive should also be involved in the benchmarking of the project. Following are some of the types of benchmarking:

·         Strategic Benchmarking: Involves understanding and evaluating the current position of the organization in relation to the "best practices" and identifies areas for improvement.

·         Internal Benchmarking: Involves comparing similar operations within the organization. For example, comparing processes of business units located in different areas

·         Competitive Benchmarking: Involves the analysis of competitor processes for a specific product or service. Typically, organizations conduct this type of benchmarking through trade associations or third parties to protect confidentiality.

·         Functional Benchmarking: Involves comparing and improving similar functions or work processes that may be common within an industry.

·         Generic Benchmarking: Involves comparing processes across industries. For example, an insurance company may benchmark a bank loan application process against its insurance claims process

While the processes may appear dissimilar, they both require timely and consistent adjudication.

Need of Business Process Integration

• Business Process Integration (BPI) entails integration of people, processes, and technology of an enterprise to create value for the customer.

• The use of Information Technology (IT) is integral to BPI.

• BPI aims at using IT to ensure that information is available at the right place at the right time.

• One of the fundamental principles of BPI is that process modernization should precede automation.

In this era of intense competition, every company must ensure that it delivers the best possible value to its customers. In addition, the need to generate profits for the shareholders of the company makes it necessary for companies to redesign and integrate their processes.

Business Process Integration (BPI) entails integration of people, processes, and technology of an enterprise to create value for the customer. BPI facilitates an improvement in the way an organization conducts its functions to reduce overall costs and provide efficient utilization of scarce resources and better support to its customers.

The use of Information Technology (IT) is integral to BPI. BPI aims at using IT to ensure that information is available at the right place at the right time. One of the fundamental principles of BPI is that process modernization should precede automation.

The growing use of information technology in companies makes it imperative for software engineers to be aware of the ways in which a company can improve its processes. As potential employees of the IT departments of non-IT companies, all software engineers need to know about business process integration.

Organizational Structure and Roles

An organizational structure is the sum interaction between individual elements or sub-units within the organization.

• A defined organizational structure provides a framework for managers and employees to work in, make strategic decisions, and divide the work between teams, groups, and departments.

• An organization can be structured based on the following categories:

• Traditional Organizational Structure

• Project Organizational Structure

• Team Organizational Structure

• Multidimensional Organizational Structure

• Virtual Organizational Structure

Based on Ownership

On the basis of the nature of ownership, business organizations can be classified into the following types:

Sole Proprietorship - When one individual heads a business organization, it is said to be Sole Proprietorship. Such an organization provides the advantage of low start-up costs and the ownership of all profits. However, the organization has unlimited liability and limited commercial life.

Partnership - A partnership organization has two or more individuals conducting the business together. The advantage of such an organization is that it has access to greater amounts of capital. A partnership business organization has similar limitations as that of Sole Proprietorship. In addition, partnership disputes are another disadvantage of such an organization.

 Corporation - A Corporation is a legal entity conducting business. It has numerous owners. The advantages of such an organization are limited liability and unlimited commercial life. However, higher organization costs and restrictions on the company are some limitations.