Given that the majority of significant threats and opportunities an organization encounters originate externally, it logically follows that FP&A resources should not exclusively concentrate on internal aspects. External aspects are also important, and this analysis is effectively done with benchmarking.
In order to Benchmark effectively, the first step is to obtain information from which to benchmark to.
There are several sources from which we can gather data to analyze markets and competitors - the internet, industry reports, research analyst reports, required disclosures by publicly traded companies, and websites of competitors and customers.
Publicly traded companies often have several reports available on their websites:
MD&A (Management Discussion and Analysis found in the 10-K)
Footnotes (these often contain important disclosures)
Proxy Sttement
Form 8-K
Supplemental Disclosures (contain information about important transactions, such as acquisitions and valuations)
You can also often find Investor presentations. These investor presentations often portray the information in a way that is easy to obtain key points.
While oftentimes there are overall performance benchmarks that are used, functional benchmarks are also very helpful.
Functional benchmarks include Product development (time to market), supply chain management, and revenue process management. By using functional benchmarks, you can compare those key processes in your organization to those of your competitor. These comparisons can enable you to highlight the gaps in your process that need improvement.
These benchmarks are also helpful when planning the budget. For example, if you're attempting aggressive growth, it would be helpful to benchmark your marketing investment and budget allocation to companies within your industry that are experiencing aggressive growth.
When doing a comparison chart to compare your competitors, one could put the Benchmarks (such as revenue, marketing, operating profit) on the left side of your table, and the competitor names across the top.
By keying into those benchmarks from which there is significant deviation, you can focus on those areas of the business which might be the most in need of addressing. Also, by understanding what your competitors are doing, you will become aware of what might potentially be some of the greatest threats to your organization's ongoing success.