When it comes to making business decisions about how to cut costs, increase efficiency, improve revenue, enhance the customer experience and reduce risk, your data probably holds more insights than you realise. If your business technology environment consists of a range of disconnected or poorly connected on-premise applications, SaaS products, spreadsheets and other data sources, chances are the value of those insights are sitting, untapped, trapped and inaccessible.
Whilst many businesses are content with sitting in the dark, guessing at how to improve business value and checking after a year or so whether it worked or not, most businesses are savvy to the fact that this isn’t an ideal approach in 2021; it’s time-consuming, it’s lagging and in most cases, it’s a huge waste of money. But the problem remains of how to unlock those insights from their prison of disconnectedness. There are a number of ways of accessing these insights, but before we get into those, let’s understand how business performance is measured.
Measuring Business Performance
Businesses measure many things including leads, sales, revenue, gross margin, EBITDA and the range of other financial metrics. This is fine, but they’re all strategic lagging indicators – they tell you how you’ve done looking back, not how you’re going looking forward. Here’s the trick to really measuring business performance in a proactive and forward-looking way:
- Start by listing your strategic business objectives. These could be anything, but fair bet they’ll have something to do with one or more of: customer satisfaction, new business/products, growth, revenue, profitability, sustainability or social outcomes. These are what we refer to as strategic lagging indicators. If you only measure these, you’ll only know if you’ve succeeded after the fact.
- From here, decompose each of these into the subset of measures that make up the strategic lagging indicator. Customer satisfaction is driven by pre-sales experience, sales experience, delivery experience, after-sales experience, user interface, price, quality and service. While some of these might be leading, the majority are likely to still be lagging. These are what are sometimes referred to as the Operational Metrics Layer or Key Result Areas (KRAs) – the bridging metrics between what we want to know, and what we can measure.
- Next, we again decompose each Operational Metric into all its constituent elements. The delivery experience is driven by on-time delivery, friendliness of delivery staff, completeness of delivery and whether the goods (or services) were delivered in the described condition. These are what we refer to as Tactical Key Performance Indicators (KPIs). and will likely be a combination of leading and lagging metrics.
- Finally, we apply a measure and a data point to each KPI. For goods, on-time delivery is measured from the Proof of Delivery time stamp against the promise date. For services, this may be related to contracted information or Service Levels. The friendliness of delivery staff can measured via Voice of the Customer (VOC) surveys and so on for each KPI.
From this simple four-step mapping exercise, we can now see how we can use a timestamp in a business system to work out if we’re going to meet our strategic objectives! Neat, huh? This mapping exercise – done across all strategic lagging indicators, operational metric and tactical KPI’s – is an extremely powerful means of ensuring you’re measuring the right things in your business.
But this leads us back to that same problem – each of these data points may be locked in a separate system. Extracting and analysing this data from a range of disparate systems could be a full-time job – or several full-time jobs – and even then there’s no guarantee that the data formats will be compatible. To reduce the effort required to extract data from individual systems, businesses could go through an integration exercise to develop an appropriate set of API’s which call or send data to or from native systems of record into a centralised data lake. This data lake can then be queried with customised automated reporting queries which then pull data into a 3rd party reporting or visualisation platform for consumption by the business. This approach can be expensive and time-consuming, and if there are issues with extracting proprietary data formats from 3rd party platforms, large parts of the value can be undermined.
Unlocking Data Insights Seamlessly
There is however a simple, cost-effective and low-risk way of unlocking these insights from your data. As Small to Medium Businesses mature, considering a business-wide migration to a platform like SAP BusinessOne or SAP Business ByDesign presents the opportunity to bring all of your data, all of your reporting, all of your visualisation and all of your insights within easy arms-reach. Instead of going through expensive and technically difficult integration activities with custom coding and data lakes, your business could enjoy insights extracted directly from all parts of your business and delivered in visual reporting formats which are both easy to consume and easy to drill down to get more detail. This will allow your business to review your tactical KPI’s and understand what impact the businesses current performance will have on the achievement of strategic objectives in the future. Areas of the business that are underperforming won’t just be identified, but so too will the root causes of these performance issues, so that the business can make quick and simple adjustments in real-time to correct the course and get back on track.
This is why SAP BusinessOne and SAP Business ByDesign customer’s globally enjoy increased interoperability, improvements in on-time production, timely deliveries and cost reduction while improving both customer and employee satisfaction.
All that’s left for your business to do is to make confident, informed decisions to improve business value. Contact our friendly, local team to find out how we can help. Book a consultation at a time that’s convenient for you.