(4) KPIs – How Do They Link To Business Processes?

Imagine you are in charge of a brewery. You are in the control room and have a dashboard showing the various stages in the brewing process. These processes might include

• Receipt of raw materials
  
• Preparation
• Fermentation
• Filtration
• Bottling
• Casing
• Despatch & sale

To maximise profit, what are the key measures you want to see on your dashboard for each stage? The measures will fall into two camps, “results” and “drivers”: (1) Key Performance Drivers (KPDs), such as:

• Cost of materials
• % Raw materials rejected/accepted
• Yield of preparation
• Temperature of fermentation
• Energy cost of fermentation
• Yield of filtration
• Bottles smashed
• etc

(2) Key Results Metrics (KRMs) such as:

• Volume of fermentation mixture
• Volume of beer produced
• Number of bottles filled
• Number of cases stacked
• Number and value of cases despatched
• Profit

By monitoring key measures like these you can keep a close handle on productivity and profit. Now imagine you are looking at the processes in your own business. The exact same principles can be applied, looking at the processes in typically three groups: (1) Sales/Marketing (2) Operational, including HR (3) Financial, including credit control The key is to set out the processes, consider what is important to measure, and then track the KRD and KRM metrics in some form of BI system. How do you monitor your business?

(6b) BI Systems - What's Important in Selection?

Selection of a BI tool is a major decision. Key questions include:

(1) Will the reporting, analysis and forecasting capabilities suit the business, now and in the foreseeable future? This assumes that the KPIs, graphical preferences and other aspects have been suitably defined.

(2) Is the tool easy enough to use and administer?

(3) Is the tool suitable for the size of business in terms of its target market, performance for the data volumes envisaged, and cost?

(4) Is it designed to be developed and modified by a systems accountant in a user department? Or does it need formal programming skills, to be developed by the IT department?

(5) Given the fast pace of acquisitions in the BI market, what is a tool's likely strategic future? Is it likely to thrive or suffocate?

(6) A variety of other aspects, such as implementation and support arrangements

If you would like help in clearly defining KPIs and reporting requirements across the business, or in selecting a suitable BI tool, please contact me - details in my profile.