According to an old business maxim, anything that is measured and watched is improved. Peter Drucker, widely regarded as the greatest management thinker of all time, is credited with “If you can’t measure it, you can’t improve it.”
The concept of managing through Key Performance Indicators (KPI’s), a Scorecard, a Dashboard, or Metrics has been around for a long time. Whatever you call it, it is a handful of strategic numbers that can tell you at-a-glance how your business is doing. For our purposes here, we will call this strategic handful of numbers KPIs.
The unfortunate reality is that most companies are not measuring and watching how their business is doing proactively and meaningfully on a daily / weekly basis. They lack the defined KPI’s or rocks. They might rely on a profit and loss statement, but that is data that comes after the fact and you cannot change the past. With KPI’s, however, you can change your future.
Let us go back to the thought that “If you can’t measure it, you can’t improve it.” When you think about this, it should immediately make sense how true it is. It is like trying to improve your golf game, but never keeping score, so you do not know if you are getting better or not.
It can be difficult trying to figure out what your Key Performance Indicators are. We know the KPI’s will be different for each company. That is why a great starting place for your KPI’s will be in your business plans and Rocks (goals); You will be able to come up with at least some of your financial and functional KPI’s from these two sources. It is best to start off with the most important and specific KPI’s than to have too many and get lost in the data.
Rather than make an example list of KPI’s, I will spend the rest of this article using a real client problem, and I will share with you how we resolved defining the KPI’s and then both pulling the data together and automating reporting with Technology so that at-a-glance, you can see daily exactly where you are at so that you can proactively make changes before damage is done and displayed in a P&L statement.
Both in my own business and with all of our painting contractor clients we have seen and heard of serious problems and financial loss due to time and materials reporting being done weekly or bi-weekly or incorrectly to find out that in 1-2 weeks thousands, even tens of thousands of dollars or more have been lost. Worse is that the loss could have been prevented with more timely and better status communication and reporting.
A solution that we have implemented for our clients as well as ourselves is to have the client / project deliverables and budgets in project management software or a CRM software so that you have the data that you are going to use in a centralized and integratable location.
This is critical, this type of solution needs to be planned out in your Technology Road map which is related directly back to your business plan. This will help you to be able to make an educated decision on which provider / software solution you choose for your company.
As part of planning out the automation of your KPI’s, you need a software solutions that will give your office and field workers the ability to do daily time and materials reporting via their cell phone / tablet so that management will have a real time status of where each project is at on hours and materials daily. This makes it a lot easier to achieve the project goals and can help you be more proactive on actuals for time and materials by preventing waste and shortages, to mentioned just a couple benefits.
For time and materials solutions, we use the same base solution, but meet with the client to go over their unique challenges and goals. Then we decide what the Key Performance Indicator(s) will be and how we will report them back to whomever will be monitoring. In most cases we will also add this report to a management dashboard or create a new dashboard so that in real time at-a-glance, management can see the exact status. Do not think you are too small for this; if you do not measure it, you cannot change it. If you could change the issues that were preventing you from moving your rocks, shouldn’t you?
One of the exciting benefits of this for smaller companies is that this automates the reporting for you; you do not need another person or an additional 4 hours a day. You can get an automated report on the device of your choice when you need it. Just as importantly the report will let you know what has not been done in real time so that you can be proactive.
Our company does an early morning daily team meeting where we go over the KPI reports together so that we can proactively make any changes needed to get back on course. Many of our project-based clients have adopted this meeting so that they too can in real time make preventative changes they need to daily instead of trying to be reactive when the P&L shows up.
There are a lot of good choices for reporting software; we like Microsoft Power BI to communicate real time status and alerts. One of the nice features of Power BI is that it can connect to almost any data source including spread sheets.
Every time without exception, our clients new to KPI reporting automation marvel at how they ever lived without the solution. Automation of tracking and reporting on your KPI’s will transform your company. Can you imagine receiving an alert (email or text) in real time letting you know that time and material has not been entered by a certain time daily, or time and material budgets are in risk of going over budget days before? Or getting whatever the exact information that you need in real time before you need it? It is time to stop imagining how good it would be and make it happen. Take your company from being reactive to proactively dealing with and handling “risk” daily.
Being a business technologist, it is very exciting how unwanted surprises can be prevented by starting off with one pain point, and then as one paint point is resolved, you tackle another one until you have defined and measured what is most important to your business so that you can watch and change the rocks that you need to accomplish to keep traction going in your business.
I have been asked, how much time can be saved by automating key reports? And how do you go about planning/purchasing/implementing a technology solution for this business risk?
To answer the first question, the cost and savings will be different for each company, but the benefits of time savings, efficiency, time gained and integrated data will help with company moral, reporting to know real time status, resulting in giving your company a competitive edge and additional value to your clients.
For the second question, the best way to start is to have your business plan in place to help you define your Key Performance indicators, then make sure that you have automating the tracking of your key performance indicators on your Technology road map as part of your overall business technology strategy.
I am a big believer in either consulting with your current technology provider or seeking the advice and direction of a Business Technology consultant. A reputable consultant will usually provide a free initial consultation. We do 😊
No matter your company size, if you want to grow and be successful, especially in the current economy, I really see this as business critical to be able to define, measure and watch your companies Key Performance indicators. Peter Drucker also said, “Management is doing things right; leadership is doing the right things.”
Being able to track your Key Performance Indicators will confirm that you are doing the right things…. Priceless.