How to Build a KPI Dashboard for a SaaS Company

Key Performance Indicators (KPIs) are the instruments by which you make strategic decisions that drive your business. Financial statements are the after-action trip summary of where you went and how you did. Hence, when running a SaaS business you cannot rest your decision making upon the time scales that financial statements require. The feedback loop is too slow.

For KPIs to be effective, they must be meaningful. A meaningful KPI has a few attributes. First, it is near to real time. This doesn't mean actually real time, but rather the time between calculating the KPI and the activity that occurred to create the KPI should be short. Second, it has an obvious action based on the KPI value. A KPI without an obvious action is at best a vanity metric and at worst a distraction. Third, a good KPI is easy to calculate or estimate. The cost of compiling the KPI must be less than the value over the near term of using it to inform decisions. Fourth, and final, it must have someone responsible for it and someone accountable to calculate it.

When working properly, a KPI dashboard lays out the operations of your company and gives you a view into how the strategic equilibrium areas are operating.

KPIs also give management decision leverage. Without a KPI, management may have a hunch and can only convey that hunch through meetings and extended communication. A meaningful KPI can be sent to the responsible party and the appropriate action can be taken. KPIs allow you to infuse 'if-then' logical systems into your business.

The goal: Create a dashboard of KPIs to drive your business.

How can Golden Section Assist? Golden Section's venture partner can assist here.

Steps

Prerequisites: 1.1 Strategic Planning and 1 Executive Execution at a minimum.

1. Prepare: Review your one page strategic plan and the crucial numbers (as outlined in Scaling Up by Verne Harnish). Think through how each leader in your organization can support the crucial numbers and whether evidence of the efficacy and quantity of that support can be quantified. Share the prompting, the one page strategic plan, and the crucial numbers with each leader. Ask them to prepare a few metrics they believe are KPIs for their reporting area. They should also prepare a presentation justifying why that KPI measure supports the crucial number.
2. Meeting 1: The Numbers
   • Share the goal of this play and the preamble in addition to walking through the company's Strategic initiatives (per Strategic planning playbook).
   • Next, each leader should report on their KPIs. The team's focus in the room should be around whether that number is meaningful (see above) and aligned to support the crucial number.
   • Settle on the KPIs (no more than 2 per person) and incorporate them into a document. Each KPI needs to have a responsible party and someone accountable to calculate it.
   • Settle on acceptable ranges of the KPIs and the actions needed if/when the ranges are blown.
3. Meeting 2: First scheduled KPI meeting
   • Set a process for KPI Review according to the process template provided.
   • Schedule your first KPI review meeting. KPIs should be reviewed often. Normally for a SaaS firm, this means weekly. Set the schedule with your team and have every reporting area report on the measure. Ensure that the time box is consistent for each person (i.e. a methodology is needed to ensure everyone is calculating on the same basis).
   • At the meeting, each person should announce their KPI, and any out of range KPIs should result in the responsible party announcing what has already happened by nature of the if/when logic.
   • The majority of the meeting should be spent on any unexpected circumstances that don't fit neatly into the if/when logic.
4. Incentives
   • Ensure that everyone knows that KPIs are the way a department can ensure it hits its strategic goals and budget attainment. The department leader should have a plan to compensate her team on KPI attainment.
   • Make sure that the teams' incentive structures are clean and that no one is receiving double incentives for the same action (i.e. incentive to hit the strategic goal and another to hit each KPI leading up to hitting that goal).