Modern ERP or integrated business systems like NetSuite offer a range of standard KPIs (Key Performance Indicators) plus the ability for a fairly competent user to design their own very quickly. What’s more the results they give reflect up to the minute information.
If you have a range of ‘best in breed’ or bespoke business systems you will probably have to extract data from various sources, massage it via a spreadsheet and present it in the form of a report. If you are lucky the data will be almost up to date.
But taking the case of a modern ERP or integrated business system how do you decide which KPIs to choose?
The first point to recognise is that you should not be ‘stuck’ with whatever you have chosen. Make sure you (or someone easily available to you in your organisation) know what KPIs are delivered with your solution, how to change them and how to develop new ones. The information that is critical to you today may be of minor interest in six months’ time. For example today you may be concerned about cash flow whereas in six months’ time growth or profit may be more important.
The next point is that the KPIs of most importance to you depend on what your responsibility is within the organisation. A finance director is interested mostly in a wide range or finance indicators whereas the sales director is probably more interested in the pipeline and sales forecasts and the support manager is outstanding support cases or time to close cases.
A recent study undertaken by SL Associates of NetSuite customers also indicated that whilst certain KPIs were considered important by most organisations, different types of organisations benefited from tracking different KPIs. For example non-profit organisations were interested in Cost of Servicing the Mission and Cost of Servicing the Mission, manufacturing companies were concerned with Production Efficiency and Obsolete Inventory Carrying Costs and Service companies Availability and Utilization of Resources.
All the organisations were interested in 360° Visibility & Actionable Insights and measuring the improvement they had experienced in implementing a modern fully integrated ERP or business management solution.
The overall message seems to me to be: the KPIs your organisation will need will vary across the organisation and over time. These variations are driven by the differing needs of the stakeholders of the organisation, the issues that are most critical at any time and the type of business – which may change over time if your business expands into providing service or decides to outsource its product manufacture or warehousing.
Note: We can provide copies of the SL Associates KPI e-books if you complete our contact form. They are available for Wholesale & Distribution, Manufacturing, Retail, The Non-Profit Sector, The Services Sector and the Software Industry, just let us know which are of interest to you and we’ll email them. A General Business one is due to be released soon.