What is a KPI?
When I started on the first implementations of EVX software for technical consultancies one of the key items on our checklist was to ask for their KPIs. Their most common answer: What are KPIs?
I was surprised – in part because they didn’t know what the abbreviation stood for (Key Performance Indicators) but more importantly they hadn’t thought about elevating a few key metrics to KPI status or thought about managing their business using KPIs.
Our goal then (and now) is to measure the success of our EVX implementations in the context of KPIs. However, I think there is an opportunity to educate the industry a bit more about KPIs and the role they play in managing your consulting firm.
KPIs are essential for running a business
KPIs are essential for running a business (any business) to exceptional performance.
To quote Peter Drucker: "What gets measured gets improved"
What Drucker means is that you can’t know whether or not you are successful unless success is defined and tracked. My guess is that you track a lot of things in your firm and there are some things that can’t be measured. Often measurement can get in the way of work, tempting us to defer investing time in this. However, that shouldn’t be an excuse to not pause and take a little time to think: what are the things that most affect my business, and how can I measure them so that I can identify my firm’s strongest and weakest points? Essentially, those are your KPIs.
KPIs are essential for running a successful project
All experienced project managers know that measuring and tracking is key to delivering a project on time and under-budget. The project related metrics that tie to the firm’s overall KPIs are likely the critical ones. Some potentials may include:
- Is my project’s cost close to its budget (for this level of progress, at least)?
- Have tasks been executed (and successfully so?)
- Is communication with the client sufficiently good?
- Is the client happy?
For my projects those are the bare minimum. For you it may be more or less – what’s important is that they’re identified – and tracked.
Know your KPIs, and track them
The bottom line is: you need to know what KPIs are essential to consistently make your projects successful, satisfy your clients, keep your staff happy, and make your business profitable. Once you’ve identified them, track them and look at them regularly.
I recommend looking at them on a weekly basis – which can be an administrative challenge for most firms. With most setups that I see (read: spreadsheets) the level of effort required affords only looking at them once a quarter or less. Even the more sophisticated (read: expensive) tools do not make it easy to customize your reports to your specific KPIs. Which is another reason I built EVX – to make it much easier to measure your businesses unique KPIs on even a weekly basis.