[A Strategic View of BI & EPM – Part 5 of 6]

Each year, your company determines goals for the following year and beyond. An updated long-range plan and next year’s budget define your performance targets, which are then summarized into specific metrics intended to focus management, drive decisions and compare results.

High level metrics, or Key Performance Indicators (KPIs), are defined by senior management as statistics related to growth in revenue or margin, market share or new markets served, client satisfaction, profitability by region and product line, employee productivity, or any other priority area of business performance. If your company is public, you may provide some indication of your targets to the investment community.

Companies can have large and deep organizations, and consist of a wide range of departments and business units. Once the high-level KPIs are determined by senior management, how do you now get everyone across the organization to march in the same direction toward achieving those targets? Even if they all see and understand the high-level metrics, will they understand their part in attaining the corporate goals, and focus their efforts appropriately?

Information, of course, is key. Here are a few ways to implement an effective reporting and measurement system that aligns the enterprise:

 

Break down the goals. Identify how each function in the company contributes to each corporate-level KPI, and define metrics for each function that will align their decisions and actions with the corporate goals. These contributing performance metrics should match the realm of operational influence of each department and level in the enterprise.

Determine and track drivers. Understand the business drivers behind each performance indicator. The target KPI has assumptions and targets for rates and drivers; by tracking the actual drivers and comparing them to the target you will identify risks and opportunities, and focus actions.

Report and visualize effectively. While numbers are always important and should be accurate, enhancing your reporting with easy-to-understand graphics will help enlighten more people faster. Deliver information and metrics in the right context of the function and level of influence of the audience – that includes the right format, level of detail, venue and frequency that best support decisions and actions.

Communicate up. Capture information about what’s really happening with market conditions, customer attitudes, and any other relevant business trends that impact your business. Those who work “in the trenches” will see these trends as they happen, while management typically will see results in the numbers, after the fact. Bridge this gap by providing a way for relevant market and operational issues, trends and concerns to get visibility up the management chain quickly.

Establish a feedback loop. As you track performance, review driver trends, and keep in touch with what’s changing in the real world, review and update your goals, KPIs and strategies. Sometimes you may need to revise the metrics, or refine what drivers you’re monitoring, or improve reporting and communication to better align the organization. Consider it a dynamic process to be pro-actively managed.

 

How effectively are you getting your entire organization to march to the same drummer?

 

Part 1 :  How Can BI & EPM Help You Build a Performance Edge?

Part 2 :  Who Needs a BI and EPM Strategy?

Part 3 :  How Can a Project & Technology Roadmap Keep Your BI & EPM Strategy On Track?

Part 4 :  Why Do Data Governance and Master Data Management Matter?

Part 6 :  How do you Build and Sustain Best Practices in BI and EPM?