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19 September 2019

Five reasons why organisations can no longer avoid standardisation

As Sir Sandford Fleming discovered in the nineteenth century with the introduction of increasingly faster steam trains, communication and travel would be difficult, if not impossible, without a standardised global time system. Hence why Sir Sandford decided to introduce a standard time system back then. Nowadays, agreeing standards has become more important than ever. 

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Globalisation appears to be an irrevocable phenomenon. In a professional context this means a colleague may not always be in the same physical location, he could actually be working on the other side of the world. Meanwhile it’s not only a uniform time system which is important, but also the way in which we store and exchange information. 

Globalisation has created a growing need within organisations for clearer definitions, Key Performance Indicators and processes. A flexible organisation focuses on its core competences, and uses help from strategic partners when needed. Worldwide outsourcing of supplementary activities becomes much simpler and less risky if the information exchanged by organisations is standardised.

However, local customs, standards and processes are still sometimes an obstacle. The DIN (Deutsches Institut für Normung) is the German Institute for Standardisation and it has conducted research into the economic benefits of standardisation within ten different sectors.

Below is a summary of the five most important benefits that come from applying standardisation:

1. Lower transaction costs

Both internal and external transaction costs are reduced when the same definitions and data models are used within organisations and between business partners. This benefit is apparent in every aspect of the transaction, from setting up the contract to final agreements based on performance.

2. Better availability of, and easy access to, information

Data standardisation makes information more accessible to all the parties involved, especially when the same standard is used across a sector, making benchmarking a possibility. It also helps promote transparency.

3. Avoiding any weak links across the chain

Standardisation also requires a more general approach to specific situations. By standardising processes and information, the dependence on individuals, departments or suppliers is reduced. This makes the organisation less vulnerable to mistakes coming from each different member involved in the overall chain.

4. Certainty in quality and processes

Organisations have more confidence when their departments and suppliers use recognised standards. It helps to make processes and results more transparent, meaning they can be compared more easily against other market players.

5. Promoting synergetic partnerships

Standards can be seen as codified knowledge. However, to achieve a standard, best practices need to be generally acknowledged by specialists within that sector. Organisations can derive value from this synergy, as a reliable source of knowledge arises, which can help them enhance the maturity level of their organisation and ease relationships with their partners.

The first standard of time was introduced in England in 1675: Greenwich Mean Time. The last country to adopt this standard joined three centuries later, and a world standard was finally an actual fact. It’s now time to reset the clocks in your organisation!

David Stillebroer
Director Product Management