Key Performance Indicators
In order to sustainably expand and secure business success, corporate goals must be clearly defined and translated into measures and key figures. It is important to constantly monitor deviations to be able to take countermeasures at an early stage. Those who can translate the information provided by management into entrepreneurial action have a competitive advantage. Key figures are the core of successful corporate management. The most important ones are referred to as key performance indicators (KPIs).
Potential of key figure-oriented corporate management
Instead of key performance indicator systems that are closely interwoven and coherent with the corporate strategy, in practice there are "historically grown sets" of individual key performance indicators that are not related to each other and make consistent and targeted management difficult. Key figures that are not clearly defined as well as unclear responsibilities in the survey often lead to a "proliferation of key figures" in which the focus on the essentials is often lost. A detailed examination of the key figures used reveals that, relatively speaking, too many financial parameters are used. These key figure systems cannot develop their full management potential.
Implementation of KPIs and balanced scorecards to achieve a holistic management approach
Our many years of experience have shown that a holistic and integrative approach is necessary to establish a management-relevant and anchored set of KPIs. KPIs must be derived from the value drivers of the business model in order to make the corporate objectives measurable and operationalizable.
The corporate goals should be recognizable in all their facets in the management system. This can be achieved by deriving the relevant KPIs and management dimensions based on the objectives and value drivers of the business model in a structured manner. For this purpose, the use of top-down derived driver-based models is recommended. Top KPIs are broken down into their operational details along the value drivers of the business model. This makes it possible to establish a self-contained and consistent management logic across all areas and levels of the company.
Non-financial and external indicators complement financial performance indicators
Effective management that allows both internal and external changes to be recognized at an early stage and provides sufficient detail for both retrospective variance analyses and forward-looking forecasts requires a proportion of non-financial and external indicators. They must supplement the financial performance indicators and make them manageable as leading indicators. For analysis and forecasting purposes, they should be directly (mathematically or logically) related to the financial indicators. The introduction of balanced scorecards can provide a holistic and balanced view of all relevant parts of the company, business processes and stakeholders and thus track the development of the business vision.
Continuous optimization of the KPI set
The definition, gathering and evaluation of KPIs, with the accompanying implementation of suitable measures for active management, is a continuous process and can be outlined in a control loop. KPI sets need to be reviewed regularly for their relevance to management and realigned if necessary. The collection of KPIs themselves also needs to be subject to a constant efficiency review in order to focus on value-adding activities, such as commenting on KPIs and deriving measures.
Clearly defined key figures, specifications and responsibilities for the survey and evaluation of the key figures (for example in KPI manuals) strengthen the comparability of the figures and create transparency in the database. The clear definition of target KPIs and measures to be taken if the KPIs are outside the tolerated range are at least as important.
Disruptive technologies enable effective and efficient key figure capture & management
The use of disruptive technologies, such as SAP S/4 HANA, big data and business intelligence systems, enables new approaches to key data collection and corporate management. If processes and application systems are designed efficiently and flexibly, sustainable leaps in efficiency are possible. Sensible compromises between standard and customer-specific developments must be weighed up and determined.
Operationalizing corporate visions
WTS Advisory provides you with holistic support at all stages, including development and reorientation as well as effective and efficient KPI-oriented corporate management. The focus is on your corporate vision, which we make operational by closely interlinking measures and key figures. Depending on your initial situation, we conduct a KPI inventory and a status quo analysis with you and derive a top-down KPI set for your company based on our expert knowledge and best-practice approaches. With our proven specialist and process experts and the technical know-how from our partner network, we provide you with comprehensive support through to sustainable implementation. We use the latest technologies, such as SAP S/4 HANA, the Jedox BI system for creating visually supported reports and analyzing big data.
Please do not hesitate to contact us if you are interested or have any questions.
