Key Performance Indicators: The Tight Rope Between Success and Failure

October 20, 2008
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Businesses tend to walk a tight rope between making the right or wrong decision. Success or failure is increasingly dependent on how a business identifies, defines, tracks, and acts upon operational Key Performance Indicators (KPIs).

In Aberdeen’s latest report – Operational KPIs and Performance Management – four key metrics were used to determine Best-in-Class (BIC) performance: Customer satisfaction, customer issue resolution capability, c..

Businesses tend to walk a tight rope between making the right or wrong decision. Success or failure is increasingly dependent on how a business identifies, defines, tracks, and acts upon operational Key Performance Indicators (KPIs).

In Aberdeen’s latest report – Operational KPIs and Performance Management – four key metrics were used to determine Best-in-Class (BIC) performance: Customer satisfaction, customer issue resolution capability, conversion of inquiries to sales leads, and sales forecast-to-plan performance. Operational performance is rapidly becoming a top priority of business intelligence and performance management projects.

In June and July of 2008, Aberdeen Group investigated a wide spectrum of operational performance management capabilities through a primary survey research program. This study, based on responses from over 200 organizations, uncovers the strategies, actions, technology investments, and services that Best-in-Class companies are utilizing to improve operational performance. Almost half of all respondents have been focusing on operational performance management for three years or more, and 77 percent of respondents have implemented recently or budgeted projects within the next 12 to 24 months.

Executives and line-of-business management are increasingly feeling the pressure to enable timelier and more accurate decisions in order to improve operational efficiencies. The faster and more accurately KPIs can be accessed, reviewed, analyzed, and acted upon, the better an organization can manage day-to-day operations and customer interactions. Aberdeen research has found that companies are focusing on obtaining solutions that address specific business pressures driving operational performance.

As business dynamics change, so too must the KPIs that are used to measure performance. Best-in-Class companies are over 50% more likely than Industry Average companies and 100% more likely than Laggards to employ a method for identifying, incorporating and reviewing / updating KPIs related to operational performance. The process of updating KPIs on a continual basis is extremely important when it comes to operational performance.

Best-in-Class companies are also more likely to establish KPIs across a wide range of operational areas of the organization. Aberdeen research has revealed that the more operational areas addressed, the more improvement will be realized across all areas of the business. Aberdeen’s research program measured respondents’ use of operational performance metrics across a wide variety of operational business areas, including: Customer performance, service performance, sales operations, and sales plan / forecast.

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