Driving Business Performance

What should be on your dashboard?

If driving best business performance is your objective, Key Performance Indicators (KPIs) are a very useful way to focus attention on what really matters.

Your IT can help you in three ways:

1. Efficiently collect information required to calculate the KPI
2. Report the KPI, plus drill-down to further analysis, explanation and exceptions
3. Deliver these reports on a timely basis to people who need it, be it on a desktop, laptop or mobile device. Dashboards are a popular method.

But the IT is only a tool. It’s what you do with it that counts. And in this case, what are the right KPIs for your business?

In financial reporting, the term KPI tends to be used for key results such as revenue and profit. But the origin of the term is quite different. The idea is that KPIs are just that – key indicators of performance. Not just what has been achieved financially, but what's driving that achievement.

Firstly what drives business success? These are the business’s “Critical Success Factors”. Secondly how can the CFSs  be sensibly measured? These indicators can be both financial and non-financial, and can be termed Key Performance Drivers (KPDs).

Let’s take the example of an airline. If planes leave on time, then:

• Customers will be pleased, will want to use that airline again out of preference, and will recommend it to others
• Staff rostering, cleaning, catering and other aspects of the business can run efficiently, at minimum cost.

So a Critical Success Factor for an airline is that planes should leave on time. How that is measured is the KPD. Perhaps the percentage of planes leaving on time, say within 15 minutes late. Plus explanations for any leaving more than that time limit. By reporting daily, and perhaps more frequently, action can then be taken by management on a timely basis.

It’s therefore useful to think of KPIs in two main groups:

1. KPIs such as revenue and profit, which are the results reported on a periodic basis such as weekly or monthly
2. “Key Performance Drivers” (KPDs), often non-financial, which reflect what is happening in the business on a much more frequent basis. Management can then take timely action

By focusing on a restricted number of KPDs, which reflect the Critical Success Factors, management attention can be focused on what really matters. The IT tools can then make data collection and KPD reporting both practical and valuable.

In many businesses, a common complaint from management is that they get too much information. KPIs and KPDs provide the focus to allow reporting packs to be trimmed right down.

If you are not getting the right level of management information you need, when and how you want it, isn't it time this was reviewed?

A fresh and independent pair of eyes can make all the difference. Do call Chris Challis on 01628 632914 to discuss.