BI: Beyond KPI’s face value
Mention Business Intelligence (BI), and everyone in the boardroom gets excited. Tableau, Birst, Qlik, Microsoft and others in the “Magic Quadrant” have some amazing tools that present your Key Performance Indicators (KPIs) in mind-blowing user interfaces, charts and plots. Having said that, is the mere action of presenting your KPIs through these tools the same as leveraging BI?
All too often I come across prospects who establish S.M.A.R.T. goals as part of their yearly business plan. The “M” in the acronym refers to the “Measurable” nature of the goals, and usually links them to the business’ KPIs. Both unfortunately and frequently, the KPIs selected as metrics to describe how close the business is to reaching the established goals fail to paint a complete and accurate picture of the complex and underlying events and processes influencing the business. Like a magician, they distract the audience from what is really going on.
As a Nuclear Engineer in the US Navy, I was taught “THE” rule: “reactor power follows steam demand”. Both factors are critical, and so inextricably linked that you can predict what reactor power (the complex underlying event) will do by closely monitoring steam demand (the KPI). And that is a good thing, because measuring and trending steam demand, albeit difficult, is significantly less complex than measuring what billions of atoms are doing at any given fraction of a second. By trending steam demand you get to infer with great accuracy reactor power.
Defining that rule took some time, disciplined observation, curiosity, creativity and yes, an expert and deep knowledge of the “business”. Getting the experts to establish that critical KPI has not only saved millions of dollars in operational costs, but also made the “business operators” much better at doing their job.
Now, look at your current dashboard and you will see some if not all of these KPIs: Number of opportunities opened in a week. Average age of leads. Average time to initial lead contact. Win/Loss ratio. Bookings to date. The usefulness of these KPIs is directly proportional to the effort that went into defining what they are, and what their trends mean. If you don’t agree, individually ask a handful of your peers to interpret the same dashboard and you will likely, not only get five versions - but also pick the one most convenient for your purposes.
No KPI “happens” in a vacuum. Every business goal is affected by many inter-related events and processes. If you are serious about using BI, take the time to clearly define your business goals and understand what impacts or defines your KPIs:
- The events, direct and indirect, that influence the business goals
- The processes, direct and indirect, that govern your business operations
- The relationship that exists, or you expect would exist, between them
Unless you carefully think about your business goals, and what business events and processes have direct and indirect impact on them you will be using KPIs to “guess” what’s going on and what is going to happen. You will have in your hands cool but useless charts - that’s it.
Take the time to define the correct KPIs and how their trends should be interpreted. That investment will give you the clear and true BI you will need to correctly manage the most complex elements of your business, so you achieve all your goals.