Measuring performance

Companies are always striving to measure their performance to assess how well they are doing, and whether action needs to be taken to get closer to the targets and goals that have been set. Many companies use Key Performance Indicators to see if they are on track.

Once KPIs have been defined they can be implemented in SYSPRO’s “Executive View” where key information can be provided in both tabular and graphical formats. Users can use standard reports or devise measures and reports of their own.

Effective use of KPIs

Possibly the most important step is to define which KPIs are critical to the future of your business and which ones are of secondary importance. This will allow you to focus on those areas which really matter.

Defining measurement terms

The most frequently used terms relating to measuring performance are:

• Key performance indicator
• Metric
• Balanced scorecard.

Understanding the difference between these terms help clarify the processes involved.

Key performance indicators (KPIs)

Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organisation.

Such measures are commonly used to help an organisation define and evaluate how successful it is, typically in terms of making progress towards its longer term goals.

Metrics

Metrics are a set of measurements that quantify results. Business metrics define the business' status or progress in measurable terms.

 KPIs are often confused with metrics. A useful way to distinguish between the two terms is this:

• KPIs consist of a limited number of critical measurements which provide guidance on what future actions to take to meet longer-term objectives and goals;
• metrics are a greater number of other measurements of a more operational nature.

Balanced scorecard

The balanced scorecard is a single reporting format which contains as many of the KPIs and metrics as a particular person needs to see. It could be printed but is more likely to be displayed on a screen, probably showing graphical information rather than figures.

An example of SYSPRO in action

The example below shows sales by month, but any data can be presented.

 Conclusion

Define carefully the key strategies which will not only maintain but also grow your business profitably. Ask yourself, “What performance data are critical to monitor the health and direction of the business?”. Any other information can be dealt with as “metrics” or management reporting, as you see fit.

The Computer Bird is able to assist clients with customising their system to give the views (or KPIs) required. 

More information from the web

For anyone who would like to research this topic in greater detail, there is a mound of information on the web. Some of the web sites we found helpful were:

http://management.about.com/

http://en.wikipedia.org/wiki/Key_performance_indicator

http://www.ibisassoc.co.uk/key-performance-indicators.htm

http://kpilibrary.com/library

http://www.balancedscorecard.org/Home/tabid/36/Default.aspx

http://managementhelp.org/