Choose the correct metrics for your business
Measurement in the context of business performance management (BPM)means choosing and using the right metrics and KPIs (key performance indicators) that suit your business.
Many different types of metrics can be configured within a BPM package. These can range from financial planning, budgeting and forecasting measures to environment, health and safety compliance to insight into what drives profitability in a product or service.
Other areas that can be covered within BPM systems include risk management, dispute management, supplier management, credit management or travel, expense compliance – in short, all aspects of the business that can be managed.
Patricia Stack, business analytics leader, IBM Global Business Services, said that the challenge for companies implementing BPM projects was often in figuring out which metrics or KPIs to concentrate on.
“While systems are providing greater visibility of information, organisations need to turn this into business insight to support their decision-making processes,” said Stack. “By considering its strategic and operational objectives in conjunction with its business drivers, an organisation can establish an appropriate set of key performance indicators. These can vary significantly by organisation depending on its business strategy, the market in which it operates and its stage of development.”
Managers and staff members at different levels of the organisation are typically able to view whether these different KPIs are being met, said Dermot McCauley, director of corporate development at Singularity.
“In real-time the information is presented in easy-to-scan graphical forms that allow ‘drilldown’ where a particular detail, for example a late customer order, looks like it needs further attention,” he said.
“The drill-down reveals increasingly detailed information until the issue is understood sufficiently for remedial action to be taken. In historical reports, the information is often used in graphical form to show performance against target. These reports can be analysed in detail to reveal trends in the numbers, for example signs of improved cost-per-claim processed.”
John Colbert, vice-president of research and analysis for BPM Partners, said that companies with prior experience of using KPIs to improve decision making at all levels tend to get the most value from their BPM systems.
“It depends on how well the organisation has accepted performance indicators as away of managing their organisation,’’ Colbert said. “The most successful organisations have people at the very top level watching the KPIs. We also find that often some metrics cascade down, particularly elements that are more operational in nature. So your knowledge workers can be in touch with those metrics every day.”
