AI-Enriched KPIs Yield Impressive Results

The year 2024 is picking up right where 2023 left off. Last year was the Year of AI, with the likes of Open AI’s ChatGPT and the promise of even more advancements capturing the public’s interest. This year is trending to be the year AI transforms the way businesses run. Businesses are not only going to deploy AI more often in 2024, but they’re going to deploy these tools in much more integral and substantive ways.

To be clear, AI is already impacting how businesses operate. As frequently noted on this website, businesses have tapped into AI tools to automate labor-intensive or time-consuming tasks. Think an AI-powered chatbot that replies and organizes service requests or lets salespeople offload the nitty gritty of drafting purchase agreements or prospecting reachouts.

But these are primarily tactical improvements that make businesses more efficient on the margins. The real revolution this year will be in the way businesses harness AI to pursue new strategic goals. New research out by MIT Sloan Management Review and Boston Consulting Group is taking a look at how businesses can enhance their key performance indicators (KPIs) with AI.

Improving the measures of a business

The crux of the research is that many businesses are standing on a goldmine of unrealized potential – great decisions that they could and should be making, but simply don’t know about. The authors surveyed over 3,000 managers from a variety of companies (online furniture retailer Wayfair, General Electric, and Walmart, to name a few). Some high-level insights:

  • 34% of organizations are using AI to create new KPIs
  • 90% of these organizations reported KPI improvements
  • When asked what AI-enhanced KPIs positively correlate with…
    • 33% said greater financial benefit
    • 54% said efficiency
    • 43% said timely measurements

The authors of the study broadly group algorithmically enriched KPIs into three buckets: Smart Descriptive KPIs, Smart Predictive KPIs, and Smart Prescriptive KPIs. What would these look like in the office technology industry?

Smart descriptive KPIs

The study describes Smart Descriptive KPIs as ones that tell a business what happened or what is happening. Office technology providers accumulate mountains of data from myriad clients, processes, products, and services they do business with; AI offers new ways to synthesize and analyze historical data with a fine-tooth comb for our businesses that may not always be in the position to do just that.

An example of this was CBS, where executives used AI to uncover factors that increased the success of TV pilots. The company was able to unearth new KPIs and confirm the validity of existing ones. Our industry services include an incredibly wide range of customers – hospitals, small businesses, government agencies, and more. Imagine using AI to dive deeper into customer history to find out what type of customers you’ve been most successful with.

Smart predictive KPIs and smart prescriptive KPIs

As the name suggests, the former KPI anticipates future performance and outcomes. Within the office technology industry, this could allow better forecasts of product and service demand by comparing install bases against a company’s order pipeline. These KPIs would be extremely powerful given the constantly evolving industry. The latter takes these KPIs a step further by recommending actions to optimize business performance.

Leveling up KPIs

Harnessing AI to improve KPIs isn’t as simple as flipping a switch. It’s part of a larger move to make KPIs more salient and improve decision-making. Boiled down to the most important shifts:

  • Don’t let KPIs grow stale: It’s not good enough to just track KPIs; organizations should regularly assess whether their KPIs are still valuable or need tweaking. Gone are the days when businesses can set and forget KPIs and benchmarks – as organizations develop and optimize, so should their KPIs.
  • Improved data governance: A KPI, AI-enhanced or not, is only as good as the data that feeds it. The most successful businesses will analyze their data holistically and rigorously. This could be a challenge since many businesses have distinct departments, each with their own data sets and KPIs. Integration of these datasets is a challenge well worth the reward with AI’s arrival.
  • Balancing old school and new school: AI has brought no shortage of disruption, and infusing our organizations with AI-powered KPIs will be no exception. Businesses should proactively head off stakeholder concerns and work to make sure these changes don’t poison organizational dynamics. AI is ultimately a tool that will be as effective as those who wield it.

Embracing change

Integrating AI even deeper into our businesses brings a certain level of uncertainty. But if there’s a line from the study that truly stuck with me, it’s this: “Our research shows that AI can both discern latent and/or undervalued key performance attributes, expanding the universe of what is measurable within organizations.” (emphasis mine) At its core, AI is effectively marketing technology built on constantly optimized pattern recognition. What better place to harness this pattern recognition than in our KPIs?

Patricia Ames
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is president and senior analyst for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Ames has worked for prominent consulting firms including KPMG and has more than 15 years experience in the imaging industry covering technology and business sectors. Ames has lived and worked in the United States, Southeast Asia and Europe and enjoys being a part of a global industry and community.