When we attempt to measure the performance of a business we need to understand two things:
- How the business is defined – the terms we use for various items and attributes
- The measurement system to be used –
Business Terminology and Definitions
A business is defined in terms of functional systems – for example, Finance, Manufacturing Ops, Purchasing, Logistics, Marketing, Sales. Each of these systems is a series of processes. Some of these processes are contained within the functional area, and others connect with other functional areas.
Each process is defined by a series of Tasks or Activities. Each Task creates, consumes or destroys data.
Since the same item of data may be used by various functional systems, we must understand how making a change in that data impacts another system or task. We can only do so if the data is connected by definition in some way.
The easiest way to do this is to define or ‘name’ that data item the same for every part of the business. For instance ‘Income’ or ‘Revenue’. If both terms are used by different parts of the business, there is the risk that slightly different definitions are afforded to the terms. This can lead to miscommunication between business groups, and misleading assumptions read into reports.
In technology systems, if these data items are both used, the data management system must map them together in a mapping table to ensure that disparate systems know how each data set relates to another.
So you see, by having common business terminology and definitions across the whole business not only makes it easier for human communication, it also makes it easier for technical communication.
See Next Blog: The Measurement System