Operational metrics and key performance indicators (KPIs) are two distinct measures that play a vital role in business success. Simply put, KPIs track long-term business goals while metrics track the progress of different measures implemented to achieve those goals, writes Scott Wiltshire, General Manager, Oracle NetSuite ANZ.

Together, these measures provide a short and long-term view of business performance and enable better decision-making.

Here are four ways operational metrics and KPIs build a stronger business:

1. Boost performance by aligning on strategic objectives

Businesses need to make sure day-to-day operations align with the overarching goals that leaders have determined are important to long-term success. This connection is achieved by aligning operational metrics with KPIs.

Business owners should identify which tasks contribute most to their overarching goals and set targets that will help them achieve those goals in the desired timeframe.

For example, a business may have a goal to increase the average transaction size by the next quarter. Progress on this can be measured through the key results needed every day to achieve the overall objective. In this case, operational metrics are the building blocks for meeting KPIs.

2. Reap the benefits of data-driven decisions

Operational metrics and KPIs give businesses the data needed for real-time insights into a company’s performance. This helps inform future decisions made by business leaders. By analysing and comparing data collected, businesses can better identify patterns, trends, and where there is room for improvement.

By using an Enterprise Resource Planning (ERP) system, businesses can more easily collect this data. For example, having one central place – a dashboard – that gathers real-time KPIs allows businesses to efficiently track their progress and quickly spot positive or concerning trends. In addition, businesses can react quickly and adjust operations as needed, helping achieve better results and improve efficiency.

3. Keep track of business performance

Businesses can also track performance through operational metrics and KPIs. By regularly reviewing and reporting on these metrics, employees and employers better understand what they need to adjust to achieve those goals and take ownership of those responsibilities.

ERP systems are an efficient way to consolidate, track and report business information and metrics. A business that holds itself accountable will help build a performance-oriented culture.

4. Speak a common language

Employees should have their own KPIs, while understanding the business’ overarching goals. Operational metrics and KPIs provide a common language and framework when discussing progress towards the business goals and objectives.

Operational metrics can be used to gain insights into different departments and teams, while KPIs are best used when reporting to management or stakeholders. Clear lines of communication can help ensure that all employees are aligned, informed, and engaged in driving the business forward.

By tracking organisational metrics and KPIs, leaders are better equipped to strengthen their business. Both measures work together to provide businesses with a data-driven approach to decision-making, enabling performance tracking and accountability, while facilitating communication and reporting.

Well-designed operational metrics and KPIs can drive financial success, strategic planning, and business efficiency. These factors all contribute to the overall success of a business.

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