Performance Change Monitoring - What To Look For

If you own or manage a business, you are keepingwhen a change started, and when it ended. At a
close watch on your "key performance indicators"minimum, make sure your systems provide you with
(KPIs) such as sales, gross profits, days' supply oftime-series charts for all your KPIs.
inventory, or any number of other such measures. ButBut is that all you should be concerned with? As an
are you able to spot changes in performance thatowner or manager, you need to know other facts that
could signal either an opportunity or threat to yourmay not be obvious in a plain time-series chart:
business?- What has the impact of the change been to-date? In
What is a "change in performance"? Here is another words, how many dollars or units has the
example of a news article that illustrates what wechange added to, or subtracted from, the "expected
mean:value" (i.e., the value the KPI would have had, if the
" ... Starbucks' same-store sales grew 4% in the Aprilchange had not occurred). This tells you how serious
quarter, about half what it did in some quarters inthe impact of the change has been, already. You can
recent years ... Starbucks' shares are off 30% sincethen decide how much priority you need to give to
last November"investigating the causes of the change, and to
Note that what is being mentioned in the first sentencedeveloping a plan of action. For example, a change
is not the actual value of the KPIs (in this case, thethat has caused the business to miss sales targets by
sales revenue). While it mentioned a growth rate (4%),$1,000,000 should get much more attention than a
that was not the key point of the author. Rather, hechange that has only caused a $1,000 shortfall so far. If
was emphasizing the change in the growth rate -- thatyou can't see the impact of the change from your
it had slowed down to about half of the growth rate incurrent charts or reports, you should strongly consider
earlier years.asking your I/T staff, consultants, or software vendors
That change in performance had a significant impactto augment them in a way that supplies that
on the value of the business (down 30%), as theinformation.
second sentence makes clear. That is why you need- Is the change accelerating? Before you take action,
to monitor these kinds of changes closely.you should determine if the change is getting more and
However, to find changes in performance usingmore pronounced, compared to the "expected
reports that show just numbers, you need to haveperformance". After all, if the growth rate is returning
reports that show the growth rate of a KPI over time.to its previous value, no corrective action may be
This is not as common a report as one that showsrequired. On the other hand, if the actual values are
just the actual KPI values over time. Many businessdiverging from the expected value more and more
systems may not include such reports. And even ifover time, then you need to take more drastic action
they do, you will need to perform a lot of mentalto bring performance back in line with expectations.
calculations to convert the report data into actionableAgain, make sure that your system produces charts
information.that clearly show how actual measurements compare
You will have a much easier time detecting changes into expected values over time.
performance if you are looking at a chart that showsChanges in performance greatly affect the value of
you the values of the KPIs over time. Charts conveyyour business. You need to have chart-intensive
far more information than a series of numbers. If youreporting systems that allow you to find such changes,
look at a chart, you can quickly grasp the magnitude,to see how much they have already affected
growth rate, and changes in the growth rate of theperformance, and to see whether they are becoming
KPI, all at the same time. You can see at a glancemore severe.