Before automating your business process, it’s important to identify the most meaningful metrics so that you can measure and analyze the results. This sounds easy, but where do you start? What metrics are the most important? And why do this at all? We will answer these questions by looking at an example: accounts payable workflow.
The right metrics to measure are the ones that help to identify how much time and cost are involved in any given business process. For an AP workflow, here are some key metrics:
- Invoice volume
- Time needed to process each invoice
- Number of people needed to process all invoices and their compensation
- Early payment discounts received and missed
- Late payment penalties assessed
Recommendation: start simple with a small number of metrics and then add to them over time as needed.
Measurement & Analysis
You’ll want to begin with a baseline for all key metrics. You’ll then want to use the same baseline measurement process to evaluate these metrics on a daily, weekly and/or monthly basis to determine gains, losses and plateaus. Then address any metric falling short of your business goals.
For example, you may want to increase the number of invoices paid within 30 days of receipt from 65% to 95% by March 15 – 65% is your baseline number and the rest are goals. If you find yourself at 75% by March 10, you know you’ve got work to do. If you’re at 100% by March 10, you know you’ve exceeded expectations and your automated workflow is working.
Recommendation: make one person accountable for both defining these metrics and measuring them over time.
If you don’t track your business process metrics, you will never know how productive you are, have become or can be. Decisions will be made on “gut feel” instead of data. Additionally, the investment made on workflow automation may actually be very profitable. However, unless there is evidence of this, there may be doubt of its effectiveness and a temptation to pull the plug for those whose gut feel and/or internal agenda tells them otherwise.
In this way, measuring and analyzing business process metrics is as important as implementing workflow automation itself. Doing both will help ensure that your organization achieves your goals, such as lowering costs, improving service quality and increasing efficiency—as in our AP workflow example.