Defining your parameters
Normative benchmarking is only as good as the parameters being used for comparison. It is very important, therefore, to define the universe against which you are comparing your software development provider or project.
What is the anatomy of your benchmark criteria, and how do you decide what this should be? Chances are it will be different for every job.
At Metri and SPR we specialise in providing PQD industry averages that are cross-sectioned according market, type and location of project, or any other benchmarking subset a client may require - such as a specific set of peers. That said, it’s an ongoing challenge to find absolute market norms and for this reason it is often said that industry averages are ‘in the eye of the beholder’.
Objective vs normative benchmarks
The only way to combat this relativity trap is to look for objective, rather than normative, metrics. How do we find these? By more narrowly defining the parameters and getting more specific.
For example, if your aim is to work with - or to be - the highest quality producer of ERP software within the financial services industry, then you only need to compare your product against the universe of ERP software providers.
But you can drill-down even further because you probably really only want to be measured against those who are successful. Remember, normative is normal, so normative benchmarks only reveal the average. For those organisations or suppliers who want to surpass best-in-class, they must be able to identify the top 5 or 10%.
Perfection may not be the goal
There is, however, a trap here because few organisations can realistically attain best-in-class status within the confines of their resources and budget, and for some the extra investment to achieve it may not benefit the business objectives. For others, as long as they are above average and comply with the norm, they are satisfied.
Therefore, when it comes to benchmarking software development programmes, whether you are the customer or supplier, PQD benchmarks may not reveal that you are a gold medal winner, but it may well determine that your project is on course to finish the marathon intact. Which, in itself, is no small achievement!