There was a time when cars didn’t have tachometers. If you wanted to know the RPM of your engine, your best indicator was how loud it was. Bear in mind, these were cars with manual transmissions. Today, just about every car has a tachometer, even automatics. A car with a manual transmission and no tach would raise eyebrows, and not in a good way. That said, people weren’t exactly burning out their clutches before tachometers went mainstream. It’s an important metric, but it’s not absolutely crucial to operating the vehicle, especially one that’s just meant for getting around. Similarly, businesses used to run on fairly primitive metrics, but for the most part, they got along just fine. However, with the advent of analytics and visual reporting, that changed. Today, even the most barebones operations rely on a bevy of metrics to know how they’re doing. It can’t be denied that this information helps businesses run better, but it’s much harder to say which metrics matter the most. If you’re new to analytics, looking to amp up your analytics efforts, or simply switching the tools you use, deciding which KPIs to use can be overwhelming. At iCharts, we help organizations with such decisions every day, and we have some advice. Simply put, you shouldn’t worry too much. You already know which Key Performance Indicators you need. You can figure out the rest later. Choosing your KPIs should be an iterative process.
Choosing your KPIs should be an iterative process.
Many of the organizations we work with start their visual reporting journey trying to figure out every last metric they’ll need. Afterall, new analytics tools mean new possibilities, and they want to be sure they’re getting the most out of their investment from day one. Unfortunately, this isn’t the best approach. Often what seems like a KPI ends up being a CPI, a “cool performance indicator,” something interesting, but not very useful. Furthermore, you can spend a lot of time working on these KPIs, only to find that no one really uses them.
If you think you need 10 charts, start by building three.
Instead of trying to have every last chart built on day one, start with a few. If you think you need 10 charts, start by building three. Not only will these give you an idea of how iCharts works, it will ensure every chart you make is useful. Once these charts are in place, you can start to think about what’s next. Talk to your employees and get a sense of what people need. Think of all the time you used to spend in Excel building the same report week after week, now use some of that time to build automated reports.
One of the best arguments for visual reports is that they are easy to understand. Instead of poring over a spreadsheet, you get information in a glance. However, once visual reporting tools are in place, there’s a tendency to want to cram as much information as possible into one chart. Afterall, why look at three charts when you can consolidate them into one? This line of thinking might make sense when your audience is full of statisticians and data analysts, but it doesn’t make sense for most people. In fact, even statisticians might need a minute. Too often, these complicated charts sacrifice clarity. Something that you used to understand in a glance starts to make you squint.
Instead, start with basic charts and basic KPIs. You can always add more later, but in order to get your organization used to using visual reports, it helps to introduce them in stages.
Start with best practices
It helps to start with basic metrics, but before long, you’ll be ready for more advanced KPIs. That said, you might not be sure what those are. If you’re new to analytics, it can be a challenge to know where to start. Thankfully, other organizations have done some of the work for you. While every business is unique, certain KPIs carry over, especially within certain industries. If you’re in the business of manufacturing, for example, you’ll definitely want to know about stock levels, output, and demand. Do your research, and take advantage of industry best practices. Here’s some KPIs you might use for manufacturing.
In summary, the best KPI is the one you’ll use. With a modest approach, you can build a foundation of proven metrics. By starting with what you need, you’ll have a better idea of what you want, and how to get it.
To learn more, and see some best practice KPIs, head to our Resources Page.