Three Steps to Achieving Business Agility
Market scenarios are constantly changing, and it has become more essential now than ever, for businesses to adapt and evolve to them. They not only risk an organization’s falling behind but also its very future in the market. The agility required to implement such changes cannot be gained overnight. It entails a modern approach, complex planning, and elimination of outdated procedures like static planning models, comprising siloed data, spreadsheets, historical snapshots, and obsolete annual plans. When the velocity of the market moved at a more stable, predictable pace, static planning was used to serve businesses sufficiently. But with the emergence of the digital age, companies left static planning behind and switched to more nimble financial modeling, driven by data and powered by cross-departmental collaboration. This model encompassed the entirety of the business: one in which planning involved not just the financial department but the whole enterprise, supported by easy-to-use automation. Accurate ‘Financial Modeling’ is exactly what modern businesses need now.
A business needs to first lay a solid groundwork and then realize its full potential. The way to do that is, by engaging a series of prime initiatives that help amplify your ROI and boost business transformation velocity. The first step in this series is identifying your critical KPIs.
What is important when everything is important?
If you deem everything critical, you will never be able to prioritize. When you do not know what exactly is responsible for driving your business, how can you make major decisions and effective plans aiming for growth? Here is the part where shining a spotlight on your mission-critical KPIs can help you quickly align everyone around them. Before delving into metrics though, it is important to recognize that tracking each department and team’s performance requires different criteria. Considering, the distinguished aspects of every department’s measurement strategy will strengthen the analysis of your core KPIs. This will ensure that the planning is comprehensive, and collaborative and that tracing reports and progress are synonymous with everyone involved.
3 Steps to Identifying Your Critical KPIs
a) Identify the critical KPIs of operational leaders by discussing with them.
Having regular discussions with key members in your organization will give you a much better understanding of how they define success, rather than just trying to guess. What their measurement strategy looks like, how they presently track and manage progress, what their data sources are, where their reports matter: you can thoroughly figure out not only their measurement strategy but also any supporting processes they might have in place. It is important to figure out the different terms that they use and what they stand for.
b) Simplicity is key.
Businesses strictly trying to stick to KPIs that can’t be tracked easily and aren’t very indicative of their performance can fall face-first. Try to avoid setting up complicated processes and adding hyper-focused metrics into play. Your aim should be to generate accurate reports and forecasts. Drowning in endless data and complex algorithms will only create confusion at the eleventh hour, right before the report needs to be pulled up.
c) Implement a robust reporting system.
After isolation of all necessary KPIs, you will need to establish a reporting workflow. The tools you will need to access and produce KPI reports should be accessible and usable by all your peers. The reporting system must be accurate enough to present a true picture of the progress of your organization, with no data overload and the reporting operations should be accurate and easy -to -use. All this is achievable through "Automated Financial Modelling". Rather than constructing all the formulas needed for a financial model, the excel based module does the bulk of this work. Financial models have today become an integral part of growing and maintaining businesses.
Detecting your critical KPIs is essential, but it is only the beginning of the stream of initiatives you must employ towards getting business agility, some other actions need to be taken to implement the same. We shall talk about these in our next blogs.