Base your business review on facts, not feelings April 2, 2007
Posted by Esa Tihilä in : eBusiness , trackback
When we see Key Performance Indicators (KPIs) it often fuels a good conversation!
We are having our quarterly business review at the moment, where we walk through all operations from various points of views. We review key financials, marketing, sales, services functions and development of customer and employee satisfaction.
For example in sales we look at size, shape and maturity of the sales funnel, we do reviews of sales plans for several cases, collect feedback from the marketplace and requirements for our products. When there are over twenty ‘active sales cases’ for each sales person in a ‘qualified opportunity’ phase he / she has a good chance to make the target for the period. Otherwise they do not. One looks at the numbers and that’s it. If the result is less, then the question is ‘what are you going to do about it?’ If the sales cases are more then they get the same question, but the tone is different.
In services we review the utilization of consultants, milestone statuses of ongoing projects, customer and project satisfaction and product issues. When customer satisfaction exceeds 4.0 / 5.0 we know that the customer is happy and a good reference.
BasWare is a growth company by profile. It means that we are actively looking for growth for our business. Last year our growth rate was 45%, and if we expect to sustain growth at the same level we need to look at all actions against expected growth targets.
The key questions to be answered are: If growth expectation is 45% what does it mean from marketing, sales, services, support point of views? How do we know where we stand? For example, if last year 15 cases were enough to make the target this year, then we need at least 23 cases to make the target if the winning ratio is the same and the market is demanding similar types of solutions.
When we have KPIs in place on the requested subjects the answers to the questions above are easier to give. We have information telling us where we stand at all times, from various points of view. This information can be compared to expected results and benchmarked against other business units.
When KPIs are in operation, discussion between management and business units it varied from a non-operational situation - we do not spend our time reviewing what BU has in their pipeline, we discuss what you are going to do about it. A big difference!
A long introduction to today’s subject - BasWare KPI Reporting Tool.
We have developed KPI tool for our Enterprise-Purchase-to-Pay software customers to enable them to run their EPP services better. Our approach for KPIs is to provide online fact-based information to support decision-making and steer discussion in companies to relevant issues from their point of view.
On top of the KPI tool itself, customers have a chance to compare their performance against their peer group. Benchmarking makes business development more precise and action-oriented. Someone may say that it puts more pressure on, for example the Shared Services Center (SSC) as well. This may be true but at least by having facts available it is easier for everybody to make and accept changes when they are proposed.
There are many types of cases: One of our customer’s SSC was accused by an organization of not servicing well. The SSC felt it was doing fine - output was good, error level was low etc., but it could not demonstrate that to management. Something was wrong.
We analysed the situation with them and set KPIs in place which proved exactly where the issues were, and from then it was easy to make corrective actions and follow the progress of improvements.
The main issue was with BU’s who did not proceed with transactions as agreed. If you do not touch invoices or requisition for many days, or don’t process them through systems, no wonder the results are not the best.
When corrective actions were implemented the overall situation improved significantly and the debate of service levels moved to another level - based on facts, not on feelings. In this example they processed 20,000 invoices per FTE (full time equivalent) in one month. How many do you do?
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