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Returning from Sapphire in Orlando I asked myself in how far the new analytical tools that have been announced or those that customers did get access to by upgrading over the last months will change the way they look at data. But what is probably more interesting, considering the new business environment, are the KPI’s changing that you used to base your decisions on. Or are you looking at the same KPIs but they now have a different or additional meaning.

It seems that a far more professional risk management is evolving as discipline not only for the big players in the industry, but even for smaller companies across. Also benchmarking is currently not focused so much on being best in class, but more an indicator that you are less in trouble than others, following the idea of ‘you don’t need to outrun the bear, you just need to be faster than the others running away from it’.

Some more specific examples around how the economic situation might be changing decisions made in your business that come to mind:

  • Adjusting the criteria for credit checks for new customers or single customer orders.
  • Changing the way you evaluate your inventory so they reflect the situation we are currently facing from a more appropriate angle
  • DSO becoming a KPI to look at much closer, resulting in changes to your limits you set for managing disputes and handing over open invoices to collections agencies
  • A stronger focus on trend analysis to get an understanding about what is waiting around the corner
  • Identification of critical business partners and using the opportunity to tie them to measurable performance programs that will give you more leverage to influence the business relationship in the future.
  • Re-evaluating budgeting and reporting for travel, communication technology and education expenses considering the great shift to virtualization of activities.

I personally look at the recession as the event that is resetting the baseline for a lot of areas in your business and will make us look at very simple things from a completely new perspective.

What do you think does this new environment mean for decision making in your company.

Thanks,

Magnus Meier

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  1. Kenneth Murray
    Interesting.  It’s very important to maintain a strong collection of well defined KPI’s for this exact reason.  It would be nice if KPI’s were all centrally defined in SAP so that if they changed then they could be updated centrally instead of having to revisit queries to update these KPI’s.
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