Enabling a Successful Metrics Program to Measure Vendor Performance

By Jessica Ibbitson, Director, Vertex

Let’s start with the business need. At a high-level you will want to set your goals and determine what objectives and results you are trying to achieve and define your desired outcomes. It’s not enough that you know you need a metrics program to oversee and measure the performance of vendors. You need to explain the why as well. What questions are you trying to answer? It sounds simple but many leaders can’t articulate the why and if you can’t articulate it, you can’t expect people to adopt your vision and change how they collect and consume information. Your defined business need will likely involve a metrics program that will focus people on what’s important and will be used to monitor progress to plan and drive improvements.

Next, map your data supply and your data requirements. What metrics do you have access to both internally and from your vendors and which of these data points will help you:

• Evaluate and drive performance and improvement

• Focus employees and vendors on the desired outcomes

• Help you make decisions?

You can only answer questions that you have data for so if you aren’t collecting the data or don’t have access to it, you can’t deliver the metric. There are three key areas of focus:

• Status metrics (where are we).

• Benchmarking metrics (how fast are we going).

• Forecasting metrics (will we hit target, what will happen in the future).

A successful launch rests on making sure you define your business needs and data requirements. Another key to a successful launch is to identify and define early adopters or ‘users’ of your metrics program. The early users will act as a spokesperson for the value of the metrics and will also help you refine your data requirements.

Getting approval and sponsorship from senior management is critical. When implementing a metrics program, you’re going to need people to change the current way they work. They will now need to use established criteria and data to make decisions and be held accountable. This might be a culture change and at minimum will be a change in the day-to-day way of working. Endorsement from above will help secure buy-in and adoption.

This step is another important piece to a successful implementation of a metrics program. As owners of a metrics program, you need to monitor how your users are collecting, managing and consumingdata. Some questions that is helpful to ask in your data stewardship oversight:

• What sources are people using to collect the data? Is the data source reliable and viable?

• Can you trust that the data source is governed by a formal, reproducible process?

• Are there gaps in the data sources? Are there gaps in understanding the data?

• What data are people looking at and using most frequently?

• How do people use the data to make decisions?

• Is there data you’re not collecting but it would be useful to complete the big picture?

• What controls and diagnostics do you have or need to identify these gaps and clean the data?

This step should loop consistently throughout the entire process.

Now that your early adopters are onboard and they have been cleaning the data, using the data to make decisions and driving and measuring vendor performance with the data for at least several months, you need to evaluate your confidence that the data sources are being appropriately managed and governed. Once you have a high level of confidence in the data, you can begin rolling it out to a larger audience. The more people you have using the same data and making decisions on that data, the more cohesive and decisive your organization will be. By this time, you would also have collected information from the early adopters that provide you insights on how to improve the metrics in the real-world setting. This additional information will help you identify more useful data that will benefit the user experience and decision making process. This process will be iterative and you will be able to add data as you begin to better understand how people are consuming it.

Change takes time and patience is the key. From our business need assessment to early adopters to expanded user-ship to finally a culture of consistent use of data-driven decision making took several years. Each year we made progress for sure, but it was not overnight and it was not on an organizational scale untilwe diligently followed the steps outlined above. One of the most important questions you can ask yourself in order to develop a data-drive culture is. If people believe in the value of the data and they trust the reliability of the data, they will understand the importance and act as a champion and partner in its use.