How KPIs Help Us Monitor and Optimize Business Performance

Any IT strategist must keep in mind the business goal, so that their technology initiatives are aimed at delivering, rather than services and infrastructure, the added value of reliability and optimal performance that makes them achieve business goals and be more competitive. Read on to understand what KPIs are and how they help us with proper business management.

Definition of KPIs

According to Techopedia, un KPI (Key performance indicators) can be anything that an organization identifies as an important factor for the business. Under the principle that “if something is not measured, it is not improved”, a KPI measures results and, from there, if something deserves your attention, take actions to correct, improve and optimize. If your company is in retail, a KPI can be delivery times; in other companies, the sales close rate can be an extremely important KPI.
This means that even though KPI is a business-oriented term, IT strategists need to know what they are and what they are used for in business intelligence.

Examples of KPIs

Importance of KPIs in Business Management

KPIs help us measure progress, identify potential problems, and make decisions. To that end, KPIs must be defined according to a business management framework, with these features:

• Be quantitatively and qualitatively measurable.
• Have a goal related to the business.
• Identify and solve variables in the organization.

To define IT KPIs, first you must understand business goals to align them with the business; then you may define business and type KPIs (financial, operational, sales, IT, etc.). With this, KPIs are written and monitored in real time and periodically.

How tools like Pandora FMS transform real-time KPI monitoring

Being able to measure the business with indicators ensures visibility on business performance, seeking to achieve objectives to be met and even exceeded. With Pandora FMS, it is possible to define custom dashboards with graphs and summaries, for monitoring KPIs in real time.

Example: User Experience (UX) Monitoring

Information centralization allows you to get the same display, streamlining communication and collaboration in your IT team. We invite you to learn about a success story in logistics by applying KPIs, by clicking on this link.

What are KPIs?

Understanding what KPIs are allows you to define them and know how to interpret them for the success of a functional area of the organization and their contribution to the overall success of the organization.

Concept of KPIs as measurable indicators

KPIs are the measures that have been selected to have visibility on organizational performance and are the basis for decision-making aimed at obtaining the expected results. KPIs are monitored and presented on dashboards to understand progress or alerts on an implemented strategy.

Difference between KPIs and general metrics

Even though KPIs and metrics measure performance, there are differences in their concept: KPIs are quantifiable measures to measure performance or progress on key goals for the organization and work as measurable benchmarks for long-term objectives. While metrics are quantifiable measures, they are used for specific business processes at operational level and in the short term.

Relationship between KPIs and the control panels offered by Pandora FMS

In Pandora FMS, from a single platform, you may have graphical interfaces that show KPIs in a visual, intuitive and organized way. You may display real-time data, analyze trends, make informed decisions, and take timely action. Each dashboard may be customized with charts, tables, and other visuals that represent KPIs. That allows KPIs to provide the essential metrics, while dashboards are an accessible and understandable way to visualize and analyze those metrics.

Pandora FMS Dashboard

Types of most common KPIs

One thing we recommend is to consider the best practices of each industry, as they help you identify the possible KPIs applicable to your organization, based on available data and constant monitoring. Some of the most common KPIs are:

• Financial:
  • In sales, customer acquisition cost (CAC) measures the total cost of acquiring a new customer, including all expenses related to marketing and sales initiatives.
  • The profit margin is used to measure the amount of profit a company makes for each weight earned. This KPI reveals the amount of profit a business may retrieve from its total sales.
  • Cash flow evaluates the company’s ability to generate liquidity, which in turn reflects that it can pay the debts closest to expiration and also allows it to have a sufficient cash margin for possible defaults.
• Operations:
  • The supply cycle time evaluates the average time from the generation of a purchase order to product reception.
  • Inventory turnover rate measures the number of times inventory is renewed in a defined period.
• From IT:
  • Network uptime refers to the amount of time an IT infrastructure is operational and accessible. It is one of the most critical for IT management, as it has a direct impact on business productivity and efficiency.
  • Response time is what it takes for an IT team to respond to an incident, from the moment it is reported until it is identified and solved.

How Pandora FMS allows you to configure alerts and see these KPIs in a single dashboard

Pandora FMS platform is conceived to be able to configure alerts and display KPIs in the same dashboard efficiently and intuitively. To do so, the following steps should be followed:

alertswill be triggered. This may include incorrect values of a module, specific events, or SNMP.
• Choose actions: Configures the actions that will be performed when an alert is triggered, such as sending an email, running a script, or logging an event.
• Create commands: Defines the commands that will be run on Pandora FMS server when alerts are triggered. You may use macros to customize the parameters of these commands.
• Assign groups: Define which commands are assigned to specific alert groups.

Once done, widgets (which are GUI elements, graphical user interface, or a small application that can display information and/or interact with the user) are added to the dashboard to display the KPIs you wish to monitor. You may include charts, tables, and other visuals. After adding them, widgets are customized to display the specific data you need, adjusting formatting, time intervals, and other parameters. Also, the dashboard is configured to be updated in real time, allowing KPI remote and continuous monitoring.

How to select the right KPIs

For KPIs to be effective, those that are truly aligned with the organization’s objectives must be appropriately selected. For that, implement KPIs that follow the same line as the company’s goals and strategic objectives.
As we said before, KPIs must add value to the organization, so it is important to know the strategic objectives and goals of your company (or the objectives of a strategic project) in order to define which KPIs make sense, since they must reflect progress towards that goal and its objectives. For example, if you have a manufacturing and distribution company, you should consider the KPIs we mentioned before, such as supply cycle time, inventory turnover rate, as well as production efficiency (percentage of productive time on the production line), total operating costs, delivery fulfillment, among others.

Practical example: selecting KPIs in a managed environment with Pandora FMS

The company Conferma, a provider of virtual payment technology in 193 countries, gives us an example of a selection of KPIs managed with Pandora FMS. For this company, the Confirmation Liquidation Platform (PLC) is fundamental, since it is the engine of reconciliation and liquidation. Monitoring was inefficient and time-consuming, considering multiple database servers, firewalls, load stabilizers, hardware security modules, virtual platforms, and web servers. Real-time display of data and processes was also required. By implementing Pandora FMS, it was possible to have tailor-made software and key database information to define the KPIs and dashboard to inform employees about the current performance metrics of the Conferma business platform, in addition to real-time automation of key performance statistics.

Tools to monitor and analyze KPIs

In management indicator monitoring, business intelligence and artificial intelligence turn out to be powerful tools to streamline the display and analysis of KPI performance, in addition to being able to automate corrective and even preventive tasks, which in sum makes the work of the IT team more efficient and quicker.

Importance of automation and display in KPI management

When leveraging automation for KPI management, data collection and analysis saves valuable time and avoids human error, and real-time insights are always critical in the up-to-date performance view. Automation also contributes to consistency through standardized and clear processes for everyone.
As for display, charts and dashboards are intuitive and clear knowledge material for everyone. Collaboration and communication are streamlined when we all have the same version of what is happening, allowing us to work in a more synchronized and effective way; and, of course, decision-making is done in a timely manner and is based on consistent and reliable information.

Pandora FMS-specific features

Pandora FMS has the capabilities to support your team in real-time display and monitoring of KPIs, such as:

• Custom dashboard setup is a Pandora FMS feature that allows each user to build their own monitoring page. You may add more than one page, and in there you may add monitoring maps, graphs and status summaries, among other elements.
• Remote and real-time monitoring, from the same platform, provides a detailed and updated real-time inventory of servers, network hardware, installed software packages, users, routers, etc. In addition, it offers real-time graphics for troubleshooting and performance monitoring. Also, APIs and remote monitoring are of great value for analyzing the state of the infrastructure and networks for a better response from your team.
• Custom and detailed report generation to evaluate performance, and even from different areas, such as support, time management and projects. Custom reports can also be created with SQL queries. In addition, reports may be presented in different formats, such as HTML or PDF, and then automatically emailed to your customers.

Example of Pandora FMS report on SLA

Practical example of KPIs and their impact

To be clear about the impact of adopting KPIs, what better than a case study of implementing KPIs in a company that uses Pandora FMS:
At Salvesen Logística, logistics operator for food manufacturers and distributors. A tool was required that not only measured technical indicators such as performance, CPU, memory, etc., but also intelligence based on User Experience and business indicators. A probe programmed to simulate user behavior was implemented and every few minutes transactions are made on probes scheduled to emulate user behavior, at the same time transactions are made on the main global IT services for Salvesen customers. This comprehensive monitoring of key KPIs (such as order management, receptions, dispatches) allows you to maintain the expected service levels, in addition to being able to anticipate possible problems before they take place.

Obtained results: Reduced response times and improved SLAs. With Pandora FMS, transactional monitoring of the business has been implemented, reproducing the full cycle through which a message goes by, from when it leaves the customer, until it reaches our mailbox (Office 365, EDI, AS2, FTP, etc.). Pandora FMS has also been integrated with Salvesen’s WMS (Warehouse Management Service) and TMS (Transport Management System) platforms.

The main benefits have been:

• Early alarms and proactivity management: detection of all service levels before it affects operations, allowing early reaction to tackle the issue, along with an automatic communication system with the employees or customers using template-based alarms (via email or SMS).
• SLA management for comprehensive quality control of Salvesen Global IT Services. An executive report may be created for the management committee and senior management of the company. Also, SLA management allows you to have the information to be able to negotiate a contract renewal with a supplier.
• Reduction of the operational load, saving 24% in the operational load of the IT area that previously had to do specific health checks, being able to focus on improvements in products and services for customers.

Conclusion

Business areas are clear about their initiatives and will be influencing decisions about IT initiatives that are aligned with the organization’s goal. You and your team must clearly define the IT KPIs that add value to the company, relying on tools with real-time information and in an intuitive way, in addition to taking advantage of business intelligence capabilities and automation that ensure the timely response of your team.
We invite you to rely on Pandora FMS to optimize monitoring, analysis and decision-making based on KPIs, by:

• Automatic data collection from multiple sources, such as servers, applications and networks.
• Alert and notification management, configuring automatic alerts to receive notifications in real time when problems or significant changes in KPIs are detected.
• APIs to integrate business processes and automate configuration, notification and process management.

Reach out to our team of consultants to help you define KPIs and intuitive dashboard you and your team require.