Years of bitter experience have convinced Robin Tidd that much of the business intelligence software used to monitor key performance indicators is "garbage" - but he is beginning to see some improvements. John Stokdyk reports.

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At a recent KPI seminar in London, AccountingWEB contributor Tidd told the 50 or so delegates that commercial software systems are making it easier to get hold of the performance data managers need for effective reporting.

"A few years ago, your heart would drop because you knew the organisation didn't have decent software and the stuff you could get out of what they had was a fraction of what you needed," he said. Typically there might be between 60 and 120 factors that could contribute to low- and high-level KPIs, but few software systems would record them or let managers get suitable data out.

"Now they've got systems that allow people to do their job each day - for example sending invoices out or doing the accounting - and because the processes are in the software, you can feed that information out to KPIs that let you see how effective they are," Tidd said. "With most of the proprietary systems you get, you can drop stuff out to Microsoft Excel or Access and re-express it in dashboards and web portals."

But there is still room for more improvements in Tidd's software KPI garden. "I have a beef about people who spend a lot of money on software but are getting no value out of KPIs," he said.

"In practice there's a big gap out there. In some of the large organisations I work with, they have IT departments who can get anything you could possibly dream of out of their systems. But frontline people aren't using any KPIs whatsoever."

Tidd estimates that even organisations that are attempting to implement KPIs through software-assisted systems could improve their effectiveness by another 50%.

Sales and marketing systems are a particular weak spot, often because the software is not being used to record the right kinds of data. Customer relationship management (CRM) systems should be able to show how much an organisation spends to generate new business leads, where they come from and conversion rates.

But companies with CRM systems often fail to record enquiries until they become orders, Tidd noted. By capturing enquiry information at an earlier stage, companies can start to find out what was happening to their marketing spend.

"If CRM software doesn't give you that information, what the hell is the point of it?" Tidd asked.

Small and medium-size businesses could probably benefit the most from adopting KPI measures, but here again the business software industry could up its game, Tidd argued.

"Companies serving the SME sell stuff with reporting and business intelligence bolted on. They tell clients they can get management information out of it from any number of reports. But when the templates don't produce the information customers want, they'll turn around and charge hundreds more to write reports to get it out," he said.

"Software customers spend thousands on the operations side and then you leave them on their own to work out what the KPIs are."

AccountingWEB's KPI library

AccountingWEB's guide to key performance indicators [1]
KPIs: Getting them right [2]
Picking the right KPIs
Getting the information out [3]
Building behaviours [4]

Full on KPIs! [5]