Monday, October 6, 2008

KPIs and Performance Management

Business success depends on the ability to measure and react to Key Performance Indicators (KPIs). Executives and managers need to make timely and accurate decisions in order to improve the operation of the organization and relationships to their customers. Best-in-Class companies are focusing on solutions that provide timely accurate information in order to improve operational performance. These solutions include:

  • Improve executive visibility to operational drivers.
  • Replace “gut-feel” decisions with “fact-based” decisions.
  • Understand operational life-line drivers of performance and how to measure them.

Aberdeen research has determined that among Best-in-Class companies:

  • 82% have at least one year of experience in managing operational KPIs.
  • 52% use reporting capabilities and information from their ERP systems.
  • All have improved customer renewal rates by 4.7% year-over-year vs. a decline among non Best-in-Class.

In order to achieve Best-in-Class performance, companies need to:

  • Identify the key operational areas of the company that need to be measured in order to improve success to the customer.
  • Identify which areas will benefit most from developing and using KPIs to make improvements to the process.
  • Develop a “selective few” set of metrics that are tied to the lifelines of the company and that are straightforward and easy to understand.

Are You Best-in-Class?