Ask a handful of chief finance officers which key performance indicators (KPIs) they monitor on a daily basis, and you get a wide range of answers. Advertisements placed for the following month, day sales outstanding, earnings before interest and taxes, net working capital, non-billable hours and the cost of deploying aid to a disaster area are just a few of them.
Of course, some variation is to be expected. The selection of KPIs is influenced by all sorts of things, ranging from the size of an organisation and the types of activities that it's involved in, to its short-term goals and long-term strategic plans – and not all KPIs merit daily monitoring.
Ask the same finance people what sort of software they use to measure their chosen KPIs, and the answers are less wide-ranging. In many cases, people seem to stick with their old favourite – the spreadsheet.
"Our business system has zero reporting capability built in," says Glenn Johnson, CFO at Palmer Johnson Power Systems, a transmission and axle specialist. The system does, however, collect information in real time and store it in a SQL database, so Johnson uses Microsoft Excel to dip into this and get the data he needs for the 20 KPIs he checks daily.
"I can get a quick pulse (or spot errors) in less than five minutes a day with this report," he says.
It's a similar story at Lincs FM Group, a regional network of nine radio stations, where the information for one of the most important KPIs is contained in the accounting system.
"Advertising orders go directly into the system as they are placed, so I look each day to see what's on board for the next month and the one after," says the network's finance chief Nick Rawlins, who then compares the orders with those taken in the previous year.
"We also need the listening figures for any point during each 24-hour period," Rawlins says. This information comes from an external provider, Radio Joint Audience Research (RAJAR), and these two sets of KPIs are then used to determine the best time to run the advertisements.
A dashing future
Many of you will probably find something familiar in both of these approaches, because for what seems like eons, business systems – for accounting, customer relationship management, enterprise resource planning, human resources, and more – have proven themselves to be brilliant at collecting data, and less brilliant at turning it into useful information.
Some of you have probably lost count of the number of times your heart has sunk at the news that a report can be produced only with the assistance of the IT department or investment in yet another expensive business intelligence (BI) or performance management system with the assistance of the IT department.
But as dashboard tools are becoming increasing available, accessible and affordable, it is getting easier for those in businesses of all sizes to get access to the KPIs or 'information highlights' they require without the support of either relatively costly systems or the assistance of the IT department.
"At one time, if you wanted to bring together the information in all of your disparate systems you needed to merge everything into a datacentre or use traditional BI tools," says Roger Stocker, a director at Intuitive BI. "As that meant an investment of £100,000 or £150,000, there were always lots of other things to spend the money on."