What teachers and breweries should know about KPIs

Electronic Solutions Change_Ver1 - CopyI realize that everyone who reads this blog must know what a KPI is. But just in case you decide to frame this and hang it on the wall of your home (right?), for the sake of your family and friends, a KPI is a Key Performance Indicator. It’s a data point or a set of data points that measures how successfully (or not) a business is achieving a particular goal. [End gratuitous educational segment]

When you want to measure success, you test reality versus expectations. It’s what teachers have been doing for generations. They set expectations (100%) and then test the class. The grades are the KPIs. A student with a set of low KPIs might get a call home to suggest strategies or offer help in a particular area as indicated by the KPIs. And if you think back to school, there were students who’s KPIs changed over time. These changes over time would be cues for a teacher (at least for the good teachers – not the ones with the long rulers) to launch an investigation to discover the source of the fluctuating performance. Not enough sleep? Girl/boy trouble? Family strife? Learning problems?

Your business can also suffer from learning problems or fatigue. The only way to discover the insights that lead to these problems is by tracking KPIs over time. With some business intelligence software, it feels like an achievement when you run a report and discover that a KPI has missed a target. But that shouldn’t even be something that you think about.

In a smart BI solution, you get customizable alerts when KPIs are missed, hit, nearly hit, overshot or any of a range of combinations of parameters according to your specific needs. Using a smart BI solution, you can set up alerts and notifications about KPIs so that you receive them at scheduled times, when thresholds are met or missed or a combination of both. You should also be able to set up alerts so that KPIs in your domain trip alerts or send messages to anyone in the system who might need to know when a KPI is affecting their part of the business.

But that’s not all you should expect from a smart BI solution. KPIs are always changing; but rarely when you expect them them to. That’s why your KPI tracking mechanism needs to be fed with real time data that can trigger alerts for stakeholders no matter where they are, even when they only have access to a mobile device. Then, once alerted, your BI solution should let you drill down to the specific data points that are affecting performance levels.

One real life example of how real time KPI alerts changed the way business works is a large brewery that started tracking basic KPIs like profit and loss, balance sheets and sales volumes. When their supply chain VP organizes meetings for all his plant directors, they all sit in front of their screens, view the same reports and show the status of their units and also the underlying reasons and insights to explain trends. By tracking more and more KPIs in real time, a local manager can receive alerts on ‘extremely fresh data’ as thresholds are crossed. The manager can then easily explain, in real time, what has changed and why. This capability has helped the business to significantly and consistently improve productivity company-wide.

Now that’s something worth framing and hanging on the wall. Maybe even the fridge.

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