The business intelligence industry is booming.
According to a Zion Market Research Report, it’s poised to grow to $26.5 billion by the end of 2021, which is a 10% increase from 2016. And it’s not hard to understand why.
The primary purpose of business intelligence solutions is to help companies make more informed decisions. And as more and more businesses become aware of the numerous benefits that BI can bring, implementing them is longer optional, even for smaller companies.
Extensive data resources allow businesses to make more accurate decisions using real-time insights. This leads to new opportunities and an overall increase in performance.
The numerous benefits of business intelligence are not hard to see. The more information about your business you can measure, the better decisions can be made to move it forward. But what exactly should you measure?
To not waste time sorting through piles of worthless data, a company must have a clear understanding of what are the most important metrics that need to be monitored.
And that’s where key performance indicators come in.
What are Key Performance Indicators?
As the name suggests, key performance indicators, or KPIs, are the metrics that are used to monitor business activities that are critical to the success of the company. They help to quickly cut through the massive amount of information that is a part of day-to-day business operations, retrieve key insights, and to maintain a pulse on business performance. This last point is especially critical, as it allows businesses to make adjustments in real time.
Still, there’s no universal list of KPIs that every company must use. Even though there are guidelines for similar types of businesses, at the end of the day, each company has to decide for itself what it needs to measure.
This decision depends on several factors, such as specific business goals, philosophies and many others.
Even companies operating in the same marketplace might have completely different approaches when it comes to choosing which KPIs to track.
However, although the specific key performance indicators that are tracked often differ, the approach for choosing them is relatively similar. It’s mostly a matter of figuring out which KPIs are the most relevant to the company or each of its departments.
To give you a better idea, here are some examples of key performance indicators that are quite popular among businesses across different industries.
While KPIs are used more often for tracking financial operations, that’s not the only way to implement them. Key performance indicators can monitor product quality, the supply chain and customer satisfaction, all while providing web analytics data.
Why are KPIs so Important for Your Business?
Key performance indicators are essential if you want to reap the benefits that business intelligence tools can provide.
With the help of the right KPIs, it’s much easier to implement a decision making strategy that’s based on reliable data and is thus much more accurate.
This allows you to manage human resources and business operations in a way that has a clear purpose and direction because each decision can be backed up with numbers.
But how exactly can KPIs help?
Well, here are a few benefits that they can offer:
Measure Financial Performance
Cash flow plays a crucial role in running business operations. With the help of KPIs, it’s much easier to control financial processes by tracking crucial metrics such as Burn Rate or the Current Ratio.
Provide Actionable Insights
An essential part of running a business is ensuring that both short-term and long-term goals are met. This requires having as much information as possible available on demand and in real time. That’s where KPIs leave their mark – they not only help accomplish goals but can actually contribute to setting more accurate targets in the first place.
Improved Company Culture
The benefits that KPIs can have for businesses reach into every aspect of running a business. They provide a consistent benchmark of performance, motivating employees by showing that good work leads to results. This creates a sense of purpose throughout the company, helping each employee feel like they are contributing to the overall success. This can not only be a huge morale boost but is also essential to increasing productivity.
KPIs play a crucial role in allowing businesses to make performance-based decisions that provide the company with all the information it needs. It’s essential to establish clear goals that are measurable using KPIs in order to reap the most benefits from them.
How Does KPI Software Work?
KPI software provides a convenient way to view, manage and analyze your key performance indicators. But in order to reap the most benefits from KPI software, it must provide a wide range of features.
Here are a few features that you should look for:
Seamless Data Input
A good software solution should allow you to both enter data manually, as well as quickly upload it from previous databases and applications.
This feature is essential in ensuring that you’re always operating with the most recent information and can make on-the-fly decisions accordingly.
Advanced Data Visualization
To make quick data-driven decisions, said data must be presented in the most convenient way possible and must be easy to sort in any way that’s necessary.
That’s why any comprehensive key performance indicator software solution must provide extensive data visualization and graph options.
Data visualization can be critical to the success of a business. Therefore, KPI software needs an intuitive way to present different types of data, so that it’s easy to understand and viewable in an instant.
Even the most advanced KPI software solutions aren’t very useful if the information can’t be accessed easily by everyone that needs it. That means it shouldn’t take more than a few clicks to share dashboards with an employee.
But these days, employee access is no longer enough.
A KPI software vendor should have a simple process (such as a generated URL) for sharing dashboards with people outside the company.
Customizable KPI Dashboard Themes
Dashboards play a huge role in how KPI software functions, so a good KPI solution must have extensive customization capabilities that allow you to choose from a list of predefined themes. Data tells a story, so having options on how the information is presented can have a huge impact on ensuring that the data gets the message across effectively.