Introduction to KPI reporting
Business owners and company executives spend much time, effort and resources to run their organizations. From product and service sales numbers, expected revenue, and budgeting to employee and customer satisfaction, ticketing system issues, and technician utilization, keeping track of all business objectives and overall performance can be challenging.
Key performance indicators (KPIs) are an excellent approach to measuring the progress within your company. They can help you understand how your teams can achieve specific goals efficiently, how to scale up or down on essential projects, and to ensure a steady revenue flow and business continuity.
This article will explore KPIs, why they are important, and how to implement them successfully within your environment, from fundamental concepts to automation and best practices.
What are key performance indicators and why are they important?
Key performance indicators (KPIs) comprise a set of quantifiable metrics used to determine and define an organization's long-term performance against a set of objectives and targets. KPIs are aimed at boosting a company's operational, strategic and financial achievements compared to competitors within the same industry or sector.
KPIs can vary between companies and industries, depending on a business's specific goals and performance criteria. In this article, we will explore numerous KPI types, including indicators regarding customer satisfaction, financial health, security and more.
Key performance indicators (KPIs) rely on data collection, storage, sifting, and synthesizing. Regardless of the nature of the information (financial or nonfinancial) or the corresponding department in your organization, KPIs aim to present responsible teams with all relevant information to enhance management and data-driven decisions.
Managed service providers (MSPs) offer technology and management services to companies of various sizes. Organizations rely on MSPs to save time, money, and operational expenses and provide top-tier quality features, flexibility, and scalability. All of the above are required to ensure tangible results in the long run.
MSPs must monitor and analyze critical metrics directly related to employee productivity and performance, resource management, and overall operational efficiency to ensure you can meet your and your customers' business goals.
Relevant KPIs for companies and managed service providers (MSP KPIs)
Monthly recurring revenue rate
Monthly recurring revenue calculates the predictable recurring income your company can generate from customers monthly. It's among the critical metrics for subscription-based organizations; it helps them predict future revenue, identify optimal growth trends, and stay competitive via strategic decisions.
- Profit Margins
Profit margin (or gross profit margin) measures how much of all sales is left as a profit after accounting for the production cost of goods sold (calculated in your desired currency).
This KPI is an excellent indicator of your company's financial health as it determines whether you can pay off expenses and collect revenue from sales successfully.
- Customer lifetime value (CLV)
CLV predicts the total net profit a company can expect from a single customer throughout the entirety of the relationship. Via CLV, you can understand the value of each customer, which helps decision-making regarding customer satisfaction, acquisition, and retention.
- Revenue growth
Revenue growth refers to a month-over-month percentage increase in your revenue. This indicator defines a solid indicator of how quickly your business is growing (especially in the startup phase).
Other important financial KPIs include:
- Net operating income
- Customer and technical support costs
- Current revenue
- Average revenue
- Total revenue
- Total monthly costs (or "total costs")
- Cash flow
- Client contribution
- Delivery expenses
- Direct costs
- Technical development costs
- Labor costs
- Operating expenses
Average resolution time (ticket resolution)
Average resolution time (ART) refers to the average amount of time required for successful ticket resolution by your customer support agents or teams. This metric shows how efficient your teams are and can pinpoint areas of improvement, such as understaffing, ineffective processes, or lack of proper training.
- First contact resolution rate (FCR)
First contact resolution rate is among the most crucial customer satisfaction and retention KPIs. The metric calculates the number of customer inquiries resolved on the first interaction with the customer. If a customer issue is resolved on the first contact, neither the client nor the support agent need to follow up on it.
- System uptime
System availability is an essential KPI to track. It represents the percentage of time that end users can access your IT systems. A minimum of 99.9% uptime is optimal to ensure unhindered everyday tasks and client satisfaction.
- Resource utilization
Resource utilization helps project managers understand performance and effort over a given period to measure team productivity and optimize resource spending and implementation.
Other important operational KPIs include:
- Total issues resolved over a specific period
- Technician utilization
- Issue resolution percentage over a specific period
Customer service KPIs
Customer satisfaction (CSAT)
Customer satisfaction (CSAT) measures how well your company's services, products, and overall customer experience meet client expectations.
- Net promoter score (NPS)
Essentially, NPS measures customer satisfaction and loyalty by asking customers how likely they are to recommend your service or product to others. (on a scale of 0-10)
Proper NPS calculation requires sensible data gathering and analysis; here, a managed service provider can help you acquire valuable insights regarding satisfied customers and potential improvements.
- Customer retention rate
Customer retention rate refers to the percentage of existing customers who remain clients of your brand after a given period. Keeping track of customer retention rates helps you understand what keeps clients with your brand and can also propose potential improvements regarding customer service.
Other important customer service-related KPIs include:
- New customers (new clients) over a specific period
- Total customers
- First-time appointments
- Customer churn rate
- Open tickets over a specific period
- Service desk expenses and performance
- Service delivery
- Support tiers efficiency
Employee performance KPIs
Employee satisfaction calculates the degree of contentment that support agents and team members experience regarding their roles in the company. Higher employee satisfaction relates to enhanced productivity, improved team morale, and better service quality.
- Productivity metrics
Productivity metrics quantify how an employee's activities contribute to your business goals and their individual performance in specific areas. Employee productivity metrics can present insights to track, manage, and enhance employee performance.
- Skill Development
Skill development KPIs typically measure your company's performance regarding training programs. Primary KPIs here measure how well you're running the training program and whether your employees are engaging with it efficiently.
Number of security incidents
This KPI calculates the total number of security incidents, such as malware infections, data breaches, system compromises, and unauthorized access attempts.
- Mean time to detect (MTTD)
MTTD measures the average time your responsible teams take to detect security incidents from the moment they've occurred. It determines the efficiency of the organization's detection means and the ability to promptly detect, identify, and respond to threats.
- Compliance levels
Compliance level (or compliance rate) calculates the degree of conformity in meeting pre-defined external laws, policies, and other regulations.
The compliance rate is among the most important key performance indicators since it lets you assess how well you conform to external regulatory standards. For many companies, compliance is crucial to avoid financial penalties and ensure business continuity.
The role of reporting in MSP KPI management
Modern companies must stay competitive in a data-driven business landscape. Following robust KPI data, organizations can make informed decisions to perform at the highest level now and in the future.
Managed service providers (MSPs) typically offer KPI report solutions to allow companies to monitor, analyze, and improve key performance indicators in real-time.
Dedicated KPI report tools typically present KPI data as an interactive dashboard to provide managers and team leaders with a visual representation of performance metrics.
Successful MSPs strive to provide businesses with a KPI dashboard that presents all critical insights in an understandable, logical format to ease information extraction and streamline the optimization process. Below, we explore the three primary benefits of regular KPI reports.
- Better collaboration, communication, and performance
Using visual dashboards to present performance metrics in a more accessible way is critical to optimizing performance across your entire organization. When every responsible person can leverage KPI data, collaboration will improve and speed up problem resolution, reduce the associated cost with communication issues, and accelerate business growth.
- Setting and meeting impactful targets
Interactive dashboards empower companies of all sizes to set optimal goals and milestones. Proper goal management can help your organization improve and scale to adapt to an ever-evolving digital landscape.
KPI measurement and customization via regular reports can provide valuable insights into your organization, from customer satisfaction and recurring revenue rate to unnecessary spending data and managed services efficiency.
- Gaining extensive visibility
Based on your service level agreement (SLA), your chosen KPI report tool can help you identify obscured patterns that can significantly boost your operational performance.
When organized in interactive, intuitive dashboards, all KPI metrics will allow you to pinpoint emerging patterns and tweak them in real time with the help of historical data.
You can rely on a real-time reporting tool or go for periodic reports that allow operations customization over a specific period (weekly, monthly, etc.).
You can also opt for "ad hoc" reporting. This approach creates KPI reports upon request. Ad hoc reports are typically created to address a specific issue or question. (e.g., if your company wants to examine the success of a New Year's Sale, it can request an ad hoc report regarding the sales volume at a specific store or of a specific product or the overall discount amount presented to customers)
Tools for effective MSP KPIs report
Unless your company relies on fully integrated CRM, ERP, and Finance systems, dedicated managed service providers can significantly boost your KPI reports. However, the MSP industry is so vast that you must do your due diligence to inspect service offerings and the MSP's performance before committing to it.
It's best to look for a solution that is easy to use and enables scorecard and dashboard creation via a few clicks. Moreover, you may benefit from a tool that empowers strategy map creation, relies on smart alerts, and can handle large projects.
The solutions should also be capable of weighing the importance of different KPI metrics. Additionally, it should be built on fully responsiblew eb technology to ensure consistent UX across all devices and platforms. Furthermore, data import and integration are a must to enable historical data access, as well as user permissions and security to protect sensitive data by assigning specific access controls.
Lastly, the solution should enable quick data export to Word, PowerPoint, Excel, and PDF and offer archiving options for the entire system.
A solution like Acronis Advanced Automation allows MSPs and their clients to optimize business operations via automated billing and smarter resource utilization. The software can drive your projects to profitability via prebuilt KPI reports on costs, including reporting on the most and least profitable clients or customers.
By utilizing revenue streams and cash flow predictions, you can see into your company's future and identify and deploy strategic methodologies to ensure top performance and business continuity.
You can integrate ticketing systems and time registration to ensure service desk efficiency. Moreover, you can automatically track SLAs to ensure SLA compliance, speed up your sales process, and determine top-performing service offerings by profitability data analysis - explore the most profitable customers, products, and services for your company with ease.
You can also leverage NPS reporting to determine client satisfaction, identify revenue opportunities, and measure service effectiveness, which can drive your recurring revenue and reduce customer churn rate. Moreover, you can detect and reveal hidden management costs to maintain optimal resource control.
Best practices for KPI report creation
Following best practices to create KPI reports isn't done simply for good measure. KPI specialists outline reliable tactics and techniques to ensure your company gets the most out of every report, whether created in-house or via managed services.
- Setting realistic goals
Dreams and goals are both focused on a potential future, but while the former can be virtually limitless, the latter must adhere to realistic boundaries. Otherwise, you risk setting the bar too high and failing to deliver on what's promised.
For example, imagine setting a sales enhancement KPI for a specific product and relying on a discount offer to boost the metrics. You wish to improve sales by 50% for the particular product but set a sensible discount of 10%. As we live in a consumer world, customers are already used to constant discounts, ranging from 5% to a whopping 50% and above. Compared to the range, the 10% discount you plan on using will rarely yield a 50% increase in sales unless it's backed up by massive marketing efforts and additional incentive factors (holidays, at-store promotions, etc.)
Setting the bar too high in such a scenario will often overwhelm your teams. They must develop ways to boost the sales KPIs without spending extensive resources to keep recurring revenue high. The cost of the goods sold will rarely cover their efforts, not to mention the time they've spent trying to boost an underperforming product. Such a scenario may affect their morale, productivity, and dedication in the long run, leading to more losses than gains.
Instead, setting a realistic sales KPI (of, let's say, 5% or 10%) is more easily achievable. If the team meets the expected KPI, they will feel better about their jobs, more confident in their skills, and more productive in their future efforts.
- Constantly reviewing and adjusting crucial KPIs
Regardless of the industry, your KPIs will change over time. Whether introducing new services, expanding your workforce, or opening multiple new physical stores, your KPIs must adapt to ensure steady business growth. Expecting the same KPIs from a team of three and a two-office workforce is not optimal and can set your company up to fail in the long run.
Here, a managed service provider can help adjust KPIs, keeping track and improving all important metrics for you. Even if you perceive managed services as an additional cost, they can save you extensive resources and work hours if customized appropriately.
- Ensuring team-wide visibility and understanding
While KPIs are perceived to be critical only for managers and team leaders, KPI visibility is crucial for overall productivity and efficiency across your organization. If every team member can inspect and understand a KPI dashboard, they will be able to pinpoint their personal areas of improvement and feel more confident in fixing operational errors and enhancing their work process. This, in turn, will make delivering services more effective, reduce the cost for additional hires, and can spike your average revenue in the long run.
Can KPI reports be automated?
Automated KPI reports can offer several crucial benefits for businesses. Relying on managed services to automate data collection, analysis, and visualization processes can minimize the human intervention (and manual effort) required to create, monitor, and adjust KPI reports.
Automation can save time and resources, improve reliability and accuracy, and help standardization and consistency. Not having to do reporting manually can free up time and resources for your teams to focus on more pressing business-critical tasks.
Moreover, automated KPIs can ensure that all reports follow the same format, style, and schedule across all company departments or projects. This will often help with communicating results and ease report comparison.
A solution like Acronis Advanced Automation can significantly reduce manual effort and streamline automation across different organizational elements. (financial, operational, productivity tasks, etc.) It enables organizations to manage IT services from a centralized, intuitive platform to reduce resource expenditure while increasing recurring revenue and customer satisfaction.
Is it safe to automate KPI reports?
Ironically, the primary benefit of automated KPI reports can also be a significant challenge. Having a solution gather and analyze data to create reports on its own, without supervision, can lead to unrealistic KPIs or unaccounted circumstances.
Automated software follows strict customization guidelines. For example, it can't take into consideration that productivity is down due to a team member being absent for a prolonged period unless a human "informs" the tool. Moreover, letting a machine comprise your critical KPI reports can be risky. It will need to update previously assumed expected KPIs and be adaptive enough to efficiently accommodate new trends and truths.
An automated reporting tool works best when supervised, at least up to an extent, by a human. Responsible teams can monitor inputs and outputs to manage unrealistic KPIs, enable efficient analysis, and aid the solution to deliver optimal results.
To provide the best possible environment for KPI report automation, companies must choose a solution that matches their needs, goals, and budget. Moreover, they must define relevant SMART KPIs aligned with their project objectives and communicate them clearly. (SMART stands for "specific, measurable, achievable, relevant, and time-bound)
Additionally, organizations must optimize data quality and presentation to prevent data overload. Techniques like data validation, transformation, and cleansing can ensure all relevant data sets' accuracy, consistency, and completeness. Once that's done, data visualization best practices should come into play - chart type selection, coloring, label formatting - so managers can use the KPI data to tell a story understandable across all teams and departments.
Relevant and reliable KPIs can make or break your business.
Tracking all critical performance metrics can raise team morale, improve productivity, and refine your brand image as a top-tier company in your chosen industry. KPI reports require sensible and adaptable goals to streamline performance reviews and detect areas for improvement.
Whether aimed at SMB, enterprise, or MSP business growth, customized KPIs can bring your company to new levels and ensure reduced costs, efficient automation, competitive advantage, and a steady revenue stream in the long run.
Acronis is a Swiss company, founded in Singapore. Celebrating two decades of innovation, Acronis has more than 1,800 employees in 45 locations. The Acronis Cyber Protect Cloud solution is available in 26 languages in over 150 countries and is used by 20,000 service providers to protect over 750,000 businesses.