Demonstrating QTC Value
Following on from my blog a few weeks ago about The Secret to a Successful CPQ Implementation, I’m going to share my experience of measuring the outcomes that successful CPQ, and more broadly Quote-to-Cash (QTC) transformations deliver.
Before I talk about how we measure these KPIs, it’s worth explaining why we define and measure them. Put simply, KPIs are a proxy for measuring value. By measuring the improvements that a transformation makes against the initial baselined KPIs, we can prove that value, and quantify it. This enables the project team and the stakeholders that have backed and delivered the program to demonstrate the value delivered.
Choosing and measuring KPIs
So how do we identify KPIs? KPIs are associated with processes or complete value chains e.g. Quote to Cash. You know the process scope as you will have defined the processes that will be impacted by the transformation during the planning phase. You then choose appropriate KPIs to capture the improvements that you have defined in your business case.
Apttus has a set of QTC KPIs that we typically use to measure success. You can choose from these, or there are other process models that you could also use that have associated KPIs. You can define your own but consider whether you are in danger of reinventing the wheel!
KPIs should follow a few principles:
– The list of KPIS should be short and succinct – too many are hard to measure and to interpret;
– Each KPI should be easily measured and easily understood;
– KPIs should be significantly influenced by the relevant project (minimum external “noise”);
– KPIs should map directly to business value; they should have direct, measurable $ impact
To enable easy measurement, reconciliation and automated reporting, most or all data used to calculate KPIs should be contained in CRM, then reported out via dashboards.
Driving value and excellence
Now you’ve defined the KPIs and have a way to capture and report them, you should start using them in your operational meetings, driving value from your transformation and delivering operational excellence.
As the transformation of the QTC value chain continues, the KPIs validate the business case and demonstrate the value delivered. As you reach your target levels, the KPIs in-use should be reviewed with a view to start introducing leading indicators i.e. climbing the KPI sophistication curve.
Indicative “Tier 1” KPIs are close-lagging indicators of success and strongly indicative of process changes brought about by the transformation.
Comprehensive “Tier 2” KPIs are longer lag time metrics that may have multiple influences but are important to executives
Predictive “Tier 3” KPIs are leading indicators of project and company performance such as deal quality and customer lifetime value. These KPIs should be measured only after Tier 1 & 2 KPIs are driven to success.
KPI sophistication curve
Having read this, I hope that you understand why we use KPIs to measure success and validate the business case. I’ve touched on how we initially define the KPIs, use them operationally and refine them over time to move towards leading, predictive indicators.
Across the last two blogs, I’ve indicated how to set a QTC transformation program up for success, and how to measure that success. Please reach out to me directly if you would like to discuss any of these topics in more detail.