As an executive, business owner or line of business director it is important to understand the critical metrics by which you should run the business. A deep understanding of those numbers, measures or factors can lead to dramatic performance improvement. That includes understanding the lower level components that drive those numbers. For instance, you could be growing revenue but an erosion in gross margin might erode EBITDA (earnings before taxes and depreciation/amortization), meaning the overall value of the company might not be increasing. One thing I have learned over the past year, thanks to some executive coaching, is that critical numbers should be the lifeblood of a company.
They need not all be financial in nature. Consider the value of customer retention for a subscription business or customer satisfaction scoring for a HVAC business. One crucial element is that everyone in your organization should have an understanding of what those metrics are, how they are measured and how they drive success throughout the organization. Also, keep in mind that these metrics should be refined over time as the business evolves. Very few companies can keep the same metrics for a long period of time. The only constant in business is of course, change.
So how can companies gather, report, analyze on these key performance indicators (KPIs) and use them to make better, faster business decisions. Business software systems are major driver in removing silos across departments and allowing stakeholders to quickly roll up operational, sales and financial data in a single view of the company. This is critical in helping organizations reduce the cost of aggregating the data and making it meaningful to the right people at the right time. If it takes organizations days to aggregate data in Excel, you can get there are inconsistencies. Plus, you can bet that the data is going to be old, stagnant, hard to understand and cumbersome to analyze. Organizations must use tools and processes to streamline data capture, normalization and reporting. If not, then a tremendous amount of valuable human capital will be wasted on simply being a “hunter gatherer” of data versus performing analytical analysis to improve business outcomes.
Many companies identify the need for better reporting and analytics but oftentimes find themselves unprepared in the actual implementation of such a financial transformation. It takes an incredible amount of rigor to define the critical elements (KPIs), determine the best way to gather that data and choose how that information will be disseminated to the organization. Our team is an expert when it comes to helping companies navigate the transformation necessary to put analytics at the core of an organization. Per a Bain & Company study, companies that use analytics best are 2X more likely to perform in the top quartile for financial performance.
At Kraft Enterprise Systems, our team of experts can help you make the most out of your transformation into an analytics driven company. We represent best in class software that removes departmental silos and improves holistic organizational performance.