Scorecards, dashboards, operational reporting, analytics, and “automated alerting” present business executives with many options for gathering, tracking,
analyzing and acting upon Key Performance Indicators (KPIs). KPI management and strategies can have a positive effect on corporate performance. But the
creation, management and continual review of KPI data can prove to be a difficult process. It often involves the integration of data from a variety of
disparate sources, complex formulas and calculations to derive accurate KPIs, and a host of infrastructure requirements to deliver the information in a
meaningful format and via an effective medium.
Recent Aberdeen research has revealed that: 93% of firms enjoying Best-in-Class performance have enabled programs and campaigns based on customer
key performance indicators.
The single biggest differentiator between Best-in-Class and all others was the propensity and completeness for measurement across all Best-in-Class
Best in Class PACE Hypothesis
Businesses thrive or fail based on their ability to identify, define, track and act upon key performance metrics/indicators (KPIs). Executives and line-
of-business management are increasingly feeling the pressure to establish the right KPIs to enable timelier and more accurate decisions. The faster and more
accurately KPIs can be accessed, reviewed, analyzed and acted upon, the better chance an organization has for success.
This benchmark study will investigate how organizations are approaching the creation and tracking of KPIs to improve accuracy and timeliness of decisions
that affect company performance.
Issue At Hand
This report will explore the business processes that executives and line-of-business management employ to accelerate and improve the quality of decisions
based on key performance metrics/indicators (KPIs). Our research and analysis will provide:
- Insight into the barriers preventing access to KPI information
- Pointers towards best-in-class strategies and tactics for improving access to and use of key performance metrics for decision-making
- Options and approaches for increasing the accuracy and timeliness of KPI information for improved decision-making
The predominant pressure is the need to measure and improve company performance. Best in Class companies will be defined as those who have improved
performance across financial, customer, process, and innovation categories while raising visibility to KPI information across the enterprise.
Aberdeen research will investigate how companies are meeting the challenge of defining, measuring and refining the KPIs that drive company performance.
The study will determine what strategies and actions companies are taking to:
- Understand the key business drivers that affect company performance
- Establish a corporate set of key performance indicators (KPIs)
- Align KPIs with line-of-business goals and incentives
- Provide a method for making KPI –based performance visible to the enterprise
- Create an on-going process for KPI review, evaluation and re-alignment
The performance metrics used to determine best-in-class are:
- Existence and improvement of KPIs in four major scorecard categories: financial, customer, process, HR & Innovation
- Increased decision-maker visibility to KPIs
- Improvement in KPI performance across financial, process, customer and innovation categories
- Improvement in “speed to decision” – decrease in time from when information is available from actual business events
- Improvement in quality of information upon which decisions are based
Case in Point
Take, for example, the case of a mid-tier wine importer operating in a highly regulated market. With a three-tier distribution system legally enforced,
there are limited opportunities to pursue growth strategies such as vertical integration. However, during the last decade there has been increasing
consolidation among the distributor and retailer channels that the company depends on to reach the consumer. This consolidation has concentrated power
downstream in the supply chain, threatening margin pressure and the potential restriction or loss of distribution channels. With only limited strategic
options, the company focused on the KPIs that could drive continued growth and competitive success in the marketplace:
- On-hand / on-time inventory available
- Outstanding “open” order value
- Net-new accounts through distribution network
- Promotion costs and ROMI
Through better management of the core KPIs that were driving business, the company was able to increase revenues by 12% in one year, more than twice the
industry average. From an operational standpoint, the availability of inventory and open order value enabled field sales representatives to gain competitive
advantage through a better view of the customer and the right price and delivery pressures to apply. Strategically, senior management could keep a pulse on
the key metrics driving new business and whether or not costly marketing programs were delivering or not.
Our research will provide actionable insight and recommendations on the strategies and methods that best-in-class organizations find important toward
measuring and improving company performance. To accomplish this, we will conduct a survey designed to assess organizations’ current and future plans to
address their strategies toward KPI information delivery.
Solution providers include a broad spectrum of software and services companies. Very large BI software providers, such as Cognos, Business Objects and
Oracle (Hyperion) have dashboard and scorecard offerings, as well as several reporting and analytics options that address KPI information discovery and
delivery. There are also several smaller providers, such as iDashboards, VisualMining, and The Dashboard Company who are focused entirely on the visual
representation and delivery of KPI information within dashboard interfaces. Additionally, there are several consulting firms, ranging from large players like
Accenture and BearingPoint to mid-tier and smaller organizations like Hitachi Consulting and Claraview who offer a combination of management consulting and
technical services to deliver a KPI-based information system.
For more information on this or other research topics, please visit www.aberdeen.com or contact Tina Putnam
directly at 617-854-5276, or via Email firstname.lastname@example.org.
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Author: David Hatch, Research Director, Business Intelligence
Founded in 1988, Aberdeen Group is the technology- driven research destination of choice for the global business executive. Aberdeen Group has over
100,000 research members in over 36 countries around the world that both participate in and direct the most comprehensive technology-driven value chain
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technology executives a unique mix of actionable research, KPIs, tools, and services.
This document is the result of research performed by Aberdeen Group. Aberdeen Group believes its findings are objective and represent the best analysis
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