If you have read my last two posts and are interested in applying BI to your business, how do you get started?
I would be begin by deciding what success look like for your business, and this should be a balanced view taking in such factors as:
- Finance. Obviously no business can survive without making a profit, even charities can be considered profitable except that their revenue is applied to those targeted by the charity. Other finance measures also need to be tracked such as cost of sale, turnover, amount owed amount owing etc.
- Growth. Most business are designed to grow and I would measure this in terms of new customers, customer churn.
- People. The most important asset to most companies is its people, but it it is very hard to measure staff morale. Indicators might be staff retention, 360 degree evidence from junior staff about management, and training days undertaken.
- Innovation. This might be nothing more than the ratio of your turnover spent on research and development.
- Social Responsibility. Your impact on the community should be important to you and this will include things like equality and diversity, environmental impact, charity work and so on.
The above is not an exhaustive list, just your starter for ten, I am no strategy consultant. Anyway moving on, for each area above you come up with you need to be able to do the following:
- Find 2-4 ways to measure it.
- Understand the factors that you will want to analyse the measure by. For example turnover could be measured by product, by sales channel (internet, mail order, reseller), by Time (say fiscal week).
- Create a metric based on the target you want to achieve e.g. increase turnover by 15% maintain profit margin at 12% and so on.
These metrics would then be combined to form a scorecard- a one page overview divided into 4–6 headings like those above each with a set of metrics underneath. This then provides the big picture on how your business is doing. Having established that you then need a set of analytical tools to help you discover what is happening behind these metrics when things don’t go according to plan. and that will be next post.