Benchmarking, or comparative analysis, has been around a long time. It’s always been one of those promises made by software vendors with analytics, but typically unfulfilled in reality, in terms of real adoption or genuine usefulness.
Often it's the sizzle part of a dashboard demonstration for a vendor – where they can wow the audience showing how a company’s financial performance compares against industry averages, by importing data from a third party data provider and comparing key financial and management performance measures such as Revenue Growth, Profitability, Revenue Per Head etc.
While interesting – it turns out that it’s not that useful to many, hence the rather tepid adoption within analytics deployments. If your company is less profitable than your industry peers, you probably knew it already – and to actually find the root cause of the issue is often a separate project entirely – and where the real work is. The insights are often too far removed from where the real action is, in the departments where people and process are at work.
Benchmarking to Improve Actual Business Processes
So it’s with interest that I saw a demo of the newly launched Blackline Insights, at this week’s company InTheBlack conference in Atlanta. BlackLine is a cloud provider of solutions that automate and streamline the close process for accounting organizations – enabling then to automate millions of bank reconciliations, quickly resolve intercompany reconciliations, and take the overall manual effort out of the close process.
But this is where it gets really interesting, with 1,200 customers across 120,000 users they have a huge amount of data about the productivity and processes of those accounting organizations they serve. The kind of data we're talking about here are process measurements like on-time completion rate, average completed assignments, or average rejection rate. With benchmarking, BlackLine customers can see how their own accounting function stacks up with the broader community, by metrics, by industry, and organization size.
Creating a Level Playing Field Between Employees and Managers
The opportunity is to enable continuously improving efficiency through continual measurement. But the really good news is that it cuts both ways, because it also creates a level playing field in the accounting organization between employees and managers.
The reason is that in addition to enabling management to identify opportunities to improve the close process by identifying areas of underperformance or lower than average productivity, it can also be used to ensure management doesn’t have unreasonable expectations on what the team can realistically crunch through during the close - by measuring against what's actually realistic in the industry. It’s actual data that accounting staff can use to establish common ground for productivity expectations, and it equips all parties with data to set goals that everyone buys into.
For example, perhaps the team is burning the midnight oil to get reconciliations done, but management is setting higher goals. With benchmarking, they can look up the norms in their segment – and share it with management to justify hiring or operating more effectively as an organization – real employee empowerment. And management can set goals for accounting productivity not just on gut, but also comparing with other high performing companies – realistic goals that employees know have been established with rigor and fairness, so everyone gets bought in. Data drives decisions - in both directions. That's a little more democratic.
Business process benchmarking opens up a whole opportunity for measurement - from comparing the speed of close, industry error rates, responsiveness, or speed of resolution. It even offers future opportunities around gamification, perhaps with badges and awards for achieving business process excellence, such as being in the top percentile of performance in the industry. There's even potential of translating measurable business process excellence into LinkedIn profile fodder!
Down the line, linking accounting efficiency benchmarks with business performance measurements can finally provide linkage between company performance and accounting process performance, providing narrative to shift the accounting organization from cost center to value center.
The Cloud as Benchmarking Enabler
The cloud makes it possible for Blackline, because everyone is running on the same codebase, and the same platform, enabling metrics to quickly be aggregated across customer usage data. It takes all the hard work out of collecting, comparing and using the data for both BlackLine, and their customers.
Interestingly, this kind of benchmarking is incredibly hard to do using tools designed for an on premise world (or fake cloud solutions)– because it requires aggregating usage, and application level metrics, across customers: so centralization and a common code-base and schema are key. You also need to get to scale in terms of the number of customers across industries to make the data useful and insights.
It’s also a pretty big contrast to the old method of business process benchmark measurement -- using infrequent surveys from professional associations and analysts, because often the measures aren’t granular, typically not broken down by industry, and then you’ve got to reconcile the data (pun partially intended) between your own internal business process measures and the survey provider. In this area, it offers the opportunity for BlackLine themselves to actually be a benchmark data provider, and even provide narrative on trends in accounting organizations based on the data.
But one of the most interesting implications for solutions like BlackLine insights is fostering a sense of community amongst users. With everyone in the Blackline community running the same solution, for the first time it enables accounting team teams across organizations to compare stats, and share tips on how they moved the dial to improve them. Everyone is sharing performance metrics, on the same playing field, and using the same platform they can actually use to improve them.
Cloud has offered up the opportunity for better benchmarking for some time, and the intersection with business process and community offers compelling value It'll be interesting to hear stories of benchmarking in action at IntheBlack 2016.