Since January 1991 we have been listening to the challenges of the middle market community; a growing number of companies whose needs have advanced beyond the well-known, well-loved software that most of their team members have used for years and years; because they now need more functionality and their needs have become more complex.

Many told us they had four, five or more diverse programs, and that most of these programs were un-integrated.During this time, many of my blogs have been written to address the needs of the Microsoft and Dynamics communities, in an effort to convey information in a straight forward style.

If your company’s needs are more complex, please feel free to reach out to our team to address those needs. But if you are among the many who need to transition to a more robust ERP package and need to get a sense of how others have evaluated their ERP needs and accomplished that journey, please read on.

Most clients have perfected their methodology on getting the reporting they need, even if way too much of it is being created via a cut and paste methodology.

About half of all clients spend a fair amount of time creating a meaningful budget every year, and about two thirds of them hold their managers and department heads accountable for any variances between their budgets and the actuals.

It can be complicated for anyone to know more than a year in advance how the company’s needs will change, let alone how to accurately budget for it. If the sales team has a great year, then having a few line items that are over budget is no big deal. But when sales are off for any reason, it can be a big deal to keep everything on track and moving forward.

The smart manager, department head, Controller and CFO all tuck away reserves for the unknown and/ or unexpected; but the smart owner takes down those reserves to hit company goals, and so it goes. Building reserves can help in the short run, but long term results depend on strong BI, and the right KPIs for the outcomes that the company is trying to achieve.

Reporting becomes the end of quarter/ end of year report card on how well the company achieved those goals. BI is an abbreviation for Business Intelligence, and refers to the technologies, applications and practices that allow for collection, integration, analysis and presentation of business information.

Some of the best known BI applications include Microsoft’s Power BI, SQL Server Reporting Services (SSRS), IBMs Cognos Analytics and Oracle’s Business Intelligence, just to name a few. Technology types might include data warehouses, dashboards, reporting, data discovery tools and cloud data services.

Data management solutions collect both historical and present data using statistics to analyze the data that’s been collected.

The purpose of BI is to better support business decision making using both BI and Analytics.

Understanding the basics of KPIs will help you get started.

First and foremost, there are different types of KPIs to consider: quantitative (can be represented by a number), qualitative (can’t be represented by a number), leading indicators (that can predict outcome) and lagging indicators (that present success or failure). Most KPIs fall into one of these groups.

Defining your company’s KPIs comes next. Base them on your company’s goals, focus on your top three metrics, consider your company’s stage, identify both leading and lagging performance indicators, and realize that KPIs vary greatly based on your industry and business model.

Examples of KPIs that are common across many industries include: growth in revenue, net profit margin, gross profit margin, cost reduction, operational cash flow, current accounts receivable, increased customer satisfaction, inventory turnover and EBITDA.

Defining and using KPIs for targeting and measuring your company’s goals is beyond the scope of this blog post, as there are scores of books and articles written based on your industry, business model and stage of growth.

So give these basics some thought, choose the few that are meaningful to you company and decide how your company needs to proceed. Once you’d made those decisions you can move on to look at the technologies, applications, and practices that are available to achieve them.

BI and Analytics, and KPIs can feel like a bit of a circular process, and that’s okay. Start with the top three things your company wants to change and decide why that change is important. You might want to consider what might happen if your company doesn’t make those changes and go from there. Technology changes all the time, as do your company’s needs.

Whatever else you do, look towards technologies that are scalable to accommodate your company’s growth and please look at the ROI of your potential investment.

Clients tell us their top ten red flags are:

  • Red Flag One: The company’s decision makers are not in agreement on their top three priorities.
  • Red Flag Two: Decision makers are in agreement on priorities, but not on methodologies to change things.
  • Red Flag Three: Decision makers in agreement on priorities, but disagree on what KPIs mean.
  • Red Flag Four: Decision makers in agreement on priorities and methodologies, but lack discipline/ follow thru.
  • Red Flag Five: The company has been in decline for some time, and the economy has taken a down turn.
  • Red Flag Six: Cash flow: company does not have adequate reserves, or the ability to borrow the money it needs.
  • Red Flag Seven: Company’s receivables aren’t being collected promptly and/ or losing customers.
  • Red Flag Eight: Company has not ramped up sales.
  • Red Flag Nine: Company has not contained expenditures.
  • Red Flag Ten: Company has difficulty retaining top employees.

Clearly any one of the red flags above, if left unchecked could cause a company to become bankrupt. No company will ever have all these red flags, but many have two or three and oddly continue to stay in business. Regardless of which issues the company has, not staying on top of their income and expenses are the most critical and should be addressed first. Deciding on a methodology comes next.

After that it’s most important to act, as inaction is the root cause of their current challenges. Even if they make an incorrect decision, it’s better than making no decision; and they can always try another tactic until they find the right combinations.

Will Rogers once said ‘Even if you’re on the right track, if you’re standing still someone’s gonna run you over’.

So get out there, make some decisions, get on the right track and get yourself moving in the right direction!

Thanks for taking the time to review ‘The Top Ten Red Flags Our Clients Share Regarding BI, KPIs, & Reporting’ but if there are additional questions you need to address, please let me know;

I’m here to help you Move Your Company Forward