For the technologically minded, there are a staggering array of solutions to the problem of benchmarking and performance monitoring by KPI. We offer one software package that alone provides more than fifty pre-selected KPIs, as well as the facility to create your own. The whole package merges seamlessly with existing cloud accounting software, so the extra effort required for you to access this valuable information is precisely zero. The information is available in real time, so as soon as your ledger is updated or your bank balance changes, your KPIs will change too. These packages will generally present their information in stylish, interactive and easy to read formats, including dashboards, and are designed to allow modelling such that you can ask the ‘what if’ question and receive immediate feedback.
Aside from demonstrating, advising and guiding you through the implementation of a specific software package, the huge variety of solutions available, and the importance of selecting the right indicators to ensure value, one of the best ways in which we can help you may be in choosing which KPIs are going to be right for your business. It’s here that our experience as entrepreneurs really comes into its own. We have first-hand experience of a wide range of industries, and an extensive network of contacts in those that we don’t know so well. After an initial meeting, we will easily adapt to your market and your style of working, and quickly be able to advise you about appropriate indicators, arrange benchmarking visits and even collaborations with leaders in your industry where this is appropriate.
If the thought of all this technology is overwhelming, don’t worry. We haven’t lost track of traditional methods of measuring performance either. Our speciality is the collection of holistic data and the implementation of strong workflow and information gathering systems, however you choose to handle your books. Give us a call to discuss your specifics.
Benchmarking is the process by which an organisation can compare its performance with its competitors, industry leaders and/or with some other measure of ‘best practise’. It is an essential process in the running of most medium and larger companies and can yield large benefits even for smaller operations. Key Performance Indicators (KPIs) are the units of measurement used to carry out this process. A discussion of the process of benchmarking, and the variety of different KPIs that can prove useful, as well as how to go about choosing them, follows:
Benchmarking literally means comparing your own operation against a pre-determined standard. The target for this analysis may be results, or the processes by which those results are produced. Common dimensions studied are cost, quality and time, but any measurable dimension of a company can be used (customer satisfaction, for example). Specific Performance Indicators – items like defects per thousand units or total lead time per thousand units – are the tools with which these dimensions are measured. Indicators that are considered particularly important for the analysis of a specific company are known as Key Performance Indicators (see below).
Virtually any aspect of a business operation can be a target for benchmarking. The techniques are so widespread that common processes have been developed and documented for approaching each one. Common targets are:
There is no single methodology for benchmarking, although key texts in the field by Camp and Kaiser Associates offer 12 and 7 point plans respectively. Some broad principles distilled from these include:
Key Performance Indicators (KPIs)
KPIs are widely used to measure the performance of a business, either as part of a benchmarking process or as a standalone monitor of performance. Virtually any data-driven aspect of a company can be used as a performance indicator, as long as that indicator is seen to be important to the overall functioning of the company, or at least the department. Key Performance Indicators, therefore, are the most important of all performance indicators.
As with the process of Benchmarking, choosing the right KPIs to measure is critical to the success of the exercise, and the definition of the ‘right’ KPI will be different for each industry, business and department. A Benchmarking Process in itself (see above) might well help to reveal the best KPIs for a particular process. A few common targets are discussed below:
Broadly speaking, KPIs can be divided as follows:
Beyond these broad distinctions, it is necessary to select specific indicators to reflect the activity being analysed. Some of the common KPIs for different industries are given below:
Sales and Marketing
The timeframe of a KPI analysis cycle will also vary according to the needs of a business in a similar way to the frequency of leading indicators like Cashflow and Profit/Loss Projection. For companies with a lean management approach or for those keeping a close eye on their performance in a phase of growth or instability, daily or even minute-by-minute reporting can be necessary, whereas a longer timeframe of weeks or months may be sufficient for others.
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