What are success metrics and why do they matter? Success metrics are important because they help you measure whether or not your business is achieving its goals.
Without success metrics, it would be difficult to track progress and identify areas of improvement.
Additionally, success metrics can motivate employees by providing tangible targets to strive for.
What are success metrics?
In discussing what are success metrics, we’ll use the Business Objective Model (BOM) as part of the ArgonDigital requirements process. These are the key components of every BOM.
1. Problems: The business problems that need to be solved or addressed.
2. Objectives: The desired outcomes or targeted objectives.
3. Product concept: The software solution that will help you achieve the stated goals.
4. Features: A high-level listing of the key features that the product will possess.
5. Success metrics: Specific, quantifiable outcomes that are measured after the product’s release to determine if the objectives were met.
Most teams do a great job of identifying problems and defining objectives. They also come up with product concepts and associated features. When it comes to defining success metrics, however, there is a tendency for teams to rely heavily on project outcomes rather than making hardcore financial measures of the software’s financial outcomes. Click To Tweet
Although product and project success can be useful outcomes to track, it is not a good idea to rely on them as the only measure of ultimate success. It is possible to achieve all the success measures from an IT perspective without actually solving the business problem.
It is counterintuitive to believe that an IT team that can deliver a product on time and within the budget that has widespread adoption can still be considered a failure. It is exactly what it is, even if it doesn’t solve the underlying business problem.
This is evident with a simple example.
Acme Widgets has repeatedly missed sales targets that were set by management. After analyzing the problem, a multidisciplinary task force discovered that the sales application used in the sales team was the culprit.
They began an ambitious project to fix it. The team created a BOM and developed the following success metrics that would be used to measure the success of their efforts.
- Within two months of the product launch, the sales team adopts the new sales solution.
- Within three months of the product launch, the legacy sales application will be completely retired.
- The time it takes to create a quote is reduced from 10 minutes to 2 minutes.
- The time it takes to place an order is reduced from 20 minutes to five minutes.
- Within six months of product launch, the product is delivered.
- The total project budget should not exceed $2 million.
The team revisited the success metrics they had set up when they started the project. They achieved every metric and were delighted. The whole team went on a weekend trip down to Lake Tahoe to celebrate a hard-earned victory.
Three months later, they were confronted by angry management who wanted to know why they had not met their quarterly sales target. They had failed.
They had lost sight of the main purpose of the project, which was to increase sales and meet sales targets. Instead, they focused on the project and product success.
Success metrics impact more than the outcome of the project. Click To Tweet
They also affect how the project is measured. It also affects how the team thinks about product features and the product. A focus on sales numbers and success metrics may have led to features that addressed the core problem.
This could include suggestions based on past purchases, easy accessibility to accessories, and similar sales enhancement suggestions for salespeople using the product. They likely concentrated all their efforts on improving existing functionality in order to meet the aggressive performance improvement targets set out in the success measures.
Transactions were processed much faster, with no qualitative differences in the “what” being sold. Net sales numbers did NOT change from previous trends.
It is therefore important to establish success metrics that measure the expected business outcomes of a project. Both project and product success metrics are valid. Unexpected failures can result from focusing too much on the former, at the expense of the financial goals of the project.
Conclusion
What are success metrics? Success metrics are a valuable tool for any business because they help you measure progress and identify areas of improvement. Additionally, success metrics can motivate employees by providing tangible targets to strive for. If you’re not already tracking success metrics in your business, now is the time to start!
