Wanting to measure and monitor performance is nothing new for businesses, and yet many SMEs still seem to be in the dark about how they are doing, both internally, as well as compared to their peers (although, as we said in last week’s post, just focussing on your own business is the best start).
Using measures, metrics and indicators (KPIs) is a well practised method for organisations to benchmark against others in their industry or market and track how things are going compared to what the business initially set out to do.
The target values of an organisation need to be based on the overall corporate strategy, i.e. what you want to achieve in sales, revenue, growth etc. When compared to the actual results you can clearly see shortcomings and where improvements are needed. It’s not rocket science when it’s laid out like this, so why do SMEs (and even larger companies) struggle to 1) establish the right targets, and 2) achieve what they set out to?
A few things might be going wrong when establishing Key Performance Indicators:
- The target values are unrealistic or irrelevant to the business
- Not everyone in the leadership team agrees on what should be target values
- There is no clear overall business strategy, or it is misaligned with the target values
- There is no adjustment to processes, even when the actual results show a need for improvement
- Success is not based on output or results but input
- Measurement is only based on historical performance, not future potential
Back to basics with a balanced scorecard?
The four key components of a balanced scorecard have been well published since the term was coined in the early 1990’s, but it’s worth revisiting them in today’s business context.
In each of the four areas, what would be relevant for your organisation to measure success against?
- Funding data
- Risk assessments
- Cost benefit data
- Profit margins
- Cash flow
- Satisfaction rates
- Segment shifts
- Geographical expansion
- Social media engagement
- Supply chain
- Delivery times
- Warehouse storage
- Inventory management
- Waste management
HR and innovation
- Employee training
- Corporate/cultural values and leadership
- Attrition rates
- Talent acquisition and retention
- Industry recognition and reputation
How does the KPI designer in SAP help SMEs?
Using SAP B1 Version for HANA, SMEs can unlock a whole new world of measurement potential for their business performance measures by using the pervasive analytics designer in the SAP cockpit. This means that your organisation can use relevant data to look into the future, and measure yourself on things that truly matter to your customers, your market, your stakeholders.
In SAP B1, the values can be compared month on month, or in comparison to the same month last year to provide you with a logical KPI for what needs to be achieved in the month or year ahead. Depending on the user access granted, you can see indicators for working capital management, financial statements, and performance management, as well as those specifically designed based on user-defined queries, analytic views, and calculation views.
In this screenshot of the KPI dashboard, you are shown a snapshot of your sales data:
You can also easily compare customers and sales per month:
In this snapshot you are shown a broader data set:
The SAP KPI designer really allows you to see your data in new ways, but it goes a lot further than that. You can instantly see where your organisation sits, in real time, and helps you to keep on top of the priorities.