Enterprise procurement teams periodically mandate that corporate buyers investigate how vendors are doing in order to shuffle work to the best-performing vendors. How does a localization manager evaluate program vendors? How do vendors show their clients that their programs have been effective?
A Key Performance Indicator (KPI) is a quantifiable value that demonstrates how effectively a company is achieving critical business goals. Measurements against this value can help an enterprise understand and evaluate how successful they are in reaching targets.
Why do you need KPIs?
How does the procurement team make good decisions — or any decisions — about which vendors to boost and which to cut without measurable data: Hunches? Anecdotal information?
“What gets measured gets done,” wrote Hélène Pielmeier of CSA in “Seven Steps to Develop Key Performance Indicators.” In a nutshell, Pielmeier concludes that programs using KPIs are more likely to reach their program objectives. KPIs help bridge the gap between goals and results.
KPIs are of course situational and will differ among organizations. Generally speaking, most localization KPIs comprise four pillars:
1. Project management
- Has the project been executed against the agreed schedule?
- How many hours does it take for a query to be resolved?
- Are the status reports accurate and timely?
- What is the linguistic quality? (This is usually measured by number of errors, but what constitutes an error as well as the acceptable number must be carefully defined.)
- What is the percentage of technically compliant deliveries?
- What percentage of deliveries are on time?
- What are the productivity gains over time?
- Are process changes occurring to the benefit of the program? (Innovation is difficult to measure, but there is evidence that a process has been improved when turnaround time increases, cost decreases, or quality increases).
- Do projects come in at budget? Are overruns minimized?
- Are cost savings occurring over time?
- Are invoices accurate and on time?
- Are change orders processed correctly?
Creating metrics along these lines can go a long way to securing quantifiable data by which to measure success.
Four things to consider when writing your KPIs
- Make it formal. If you didn’t have a meeting and if you didn’t document the agreement between both parties, then it doesn’t exist.
- Make it data-driven. For quality, how many errors per thousand are acceptable? What percentage of late deliveries are acceptable?
- Set it up before work begins. As moms have been known to say: If it’s worth doing, then it’s worth doing right. So start measuring against KPIs from the very start of your program, so you can establish your baseline.
- Be open to tweaking it. The KPIs you build at the beginning of your program may turn out to be unreasonably difficult to hit or your program may outgrow them. Recalibrate your agreed KPIs as the program evolves.
With mutual commitment, strong KPIs can be written at program start to guide the completion of the work against targets. It is crucial for both the service provider and the client to know when a good job has been done — as well as when a job isn’t good enough. KPIs are the key to this knowledge.
How does your organization establish KPIs? What are the most creative or useful KPIs you’ve come to rely on?