3 Views of Holistic Performance Measurement Using Big Data

May 23, 2013

big data

Big data now allows you to go beyond traditional key performance indicators (kpi) that focus only on financial performance.  While financial measures will always be the ultimate measures of success, using them to manage on a daily basis focuses an organization on the past. This creates a lagging mindset.  How do you focus on now  to create financial success in the future?

Given the volume of data – big data – contained in social, mobile and enterprise applications, it can be daunting to look for more kpi’s. These metrics will draw on data that resides outside of the general ledger and may require the involvement of analysts outside of the office of finance.  You will need to start gathering this data, and defining these new, more proactive measures as soon as possible. To get started, use these three perspectives in determining what data to collect:

  • Cycle-Time: Measuring productivity within organizations is common, especially at the process level.  But measuring cycle-time has far more impact than just knowing how long it takes to get things done.  Cycle-time reflects how long it takes an organization to react.  This is critical for all areas of an organization, but it is most important to consider those times it affects the ability to meet customer demand, especially when demand exceeds normal volume.  This is often the only time revenue can be maximized and missing this opportunity because you don’t understand average cycle-time of any given process versus customer expectations will directly impact your bottom line.
  • Accuracy: Too often organizations measure their own expected outcomes instead of measuring their ability to give each customer exactly what they asked for.  This is done because business is conducted according to pre-established processes.  Any requests outside of these are difficult to measure.  This challenge also makes it more likely that these “non-standard” requests will be failures.  In all but the smallest and most simple businesses (where accuracy tends to focus on availability), sufficient details of the customer request must be collected and managed in order to measure your organizations effectiveness at accurately meeting them.
  • Customer Value: It all begins and ends here.  This is what turns prospects into customers and drives customer lifetime value (clv).  Revenue is only the resulting outcome.  Being on-time and accurate aren’t of any value if in the end it isn’t the real reason a prospect is talking to you, and unfortunately they can’t always articulate the real reason they value you.  Does better atmosphere or a better product maximize revenue per customer over time? Do customers want a hassle free or a deeply intimate experience when purchasing your product, or both?  The answer can be elusive and often requires constant reanalysis to be properly defined and measured.

The answer to these questions isn’t either/or; your company must still perform well in all areas.  But it does show what employees should be most focused on, where failure can be least tolerated and where resources must be concentrated.  No company can be good at all things, or has enough resources (people, time and money) to maximize performance in all areas.  Understanding this trade-off allows leaders to make decisions that will improve performance – both financial and operational.

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About The Author

David F. Giannetto helps organizations leverage information—providing both the technology and methodology necessary to create, understand and utilize it to improve performance. Widely respected as a thought-leader in the areas of business intelligence, enterprise performance management, information management and analytics, he has led some of the most complex information-driven initiatives for today’s leading brands. He is author of two books, including The Performance Power Grid (J.Wiley & Sons, 2006), one of today’s leading performance management methodologies. He is SVP of Performance Management for Salient Management Company.

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