How Many Types of KPIs Are There?
It seems the Holy Grail for scorecards and dashboards seems to be organizations seeking to answer, “What should our key performance indicators (KPIs) be?”
It seems the Holy Grail for scorecards and dashboards seems to be organizations seeking to answer, “What should our key performance indicators (KPIs) be?”
Consider the importance and magnitude of most business process reengineering projects. The time, the money, the systems, the consultants – usually driven by some compelling external or internal concern – an acquisition, a new product line, competition and a topsy-turvy market, the need to innovate or improve quality, to change the corporate culture, to simplify, to cut costs drastically. To transform the business.
Usually I am fairly rational
and do not let my personal emotions interfere with how I interact with others. However, as the readers of my blogs and articles may have detected, my more recent writings increasingly reflect my frustrations with old school accountants. I cannot disguise my irritation and annoyance with accountants who refuse to be progressive.
Ahh, Valentine’s Day looms ever closer, and love is in the air. Whether you’ve been in a relationship for 2 weeks or 60 years, it’s a time when we focus on our relationship, and celebrate what’s great about it. Regardless of your views on Valentine’s Day itself (is it romantic or an over-commercialised gimmick to…
I recently met a managerial consultant whose intentions were sincere, however his advice was surprising, but not totally surprising, to me. He mentioned to me that a company had inquired to him whether they should consider using activity-based costing (ABC). His next step was initially encouraging. He contacted the accounting departments of the inquiring company’s…
Product evaluation criteria can utilize these four categories:
1) Fails to make money under any and all measures
2) Does not cover variable costs, but breaks even when future / downstream / derivative / service / after-market revenues are included
3) Covers its variable costs (which already includes standard direct and indirect costs, since he is assigning all costs via ABC)
4) Covers its variable costs and its associated cost of capital
Once you’ve segmented your products (or customers) by profitabiltiy, one of the basic tenants of activity-based management is to take the necessary actions to move the losers into the break-even column, and shift the break-even products into profitable territory. Yet his history showed that, once introduced, products tend to improve their profitability up to a point, then peak and level off there, no matter what actions R&D, manufacturing or marketing may attempt to propel them to the next level.
Prescription? We need to be better disciplined about terminating the losers.
OECD data shows the per capita cost of health care in the U.S. at twice the OECD average, with a lower measure of outcome (average life expectancy). I’ve no qualm with health care costs rising as a percentage of GDP; efficiencies in agriculture, mining and manufacturing are going to show up as higher spending levels elsewhere in the economy, with improved health care a clear priority for additional resources for most citizens. But at twice the cost?
Only 5% of respondents say their Finance organization is delivering Game Changing Value today? What’s that about? Please visit http://www.apqc.org/knowledge-base/documents/financial-planning-and-analysis-urgent-need-new-skills-2012-october-fm-comm to receive (free) access to the October 17 presentation. A new research paper prepared by APQC and EPM Channel argues that CFOs must now double-down on their investments in finance team training and development. The sense of urgency stems…
Many who just read “managerial accounting” in this blog’s title are not bothering to read this. Why? They do not care. They only care about external financial reporting for regulatory agencies, bankers, and investors. This frustrates me because I interpret this as their not caring about managers and employees who need better internal managerial accounting information for insights and foresight to make better decisions compared to what they are currently provided by their CFO’s function.
Despite my lack of doctoral and/or Harvard credentials, I’m going to go out on a limb and challenge a bit of the conventional wisdom that’s been passed unto us by Michael Porter (Competitive Strategy: Techniques for Analyzing Industries and Competitors – 1998), later revised by Treacy and Wiersema with their Value Disciplines model (The Discipline of Market Leaders – 1997), now taught in nearly all business school programs, and which crops up at least once at every business conference.