Measuring the Performance of Your Software Company

March 24, 2015 Brian Beattie

The journey of a software company is full of opportunities and challenges. One of those main challenges is understanding how well is your company doing at any particular function of the business, relative to other businesses in the same or similar industries.

What is Benchmarking

Your business can learn plenty of lessons from benchmarking, as it is an effective process that allows you to compare your company’s performance metrics against the performance of other companies, while giving you a complete picture of where your business stands. 

By consistently benchmarking performance in relevant aspects of your business, you are able to develop new observations and implement these best practices and lessons learned to your own business; in order to make targeted improvements as your business progresses through the different stages of its life cycle.

Why should you Benchmark

Benchmarking can help software and technology businesses answer a whole bunch of daunting questions; which include:

How much should you be spending on marketing? 
How should you be developing products or implementing software?
How much should you charge for your products and services? 
How do you invest in the future of your products to keep them current? 

These are some tough questions to answer, especially if your company is by itself in a bubble. This is where benchmarking can come in handy, as it gives you the opportunity to figure out what exactly is your business doing well, what are the areas that you need to be focusing on improving, and what are the actions you should be taking to improve your business performance.

How to Benchmark

In order to make the most of your benchmarking process, you need to first and foremost be able to define what it is that you want to benchmark. These should be business processes that are measurable, and exist in other businesses. Measuring functions or aspects of your business that are simply “good to know” is not a particularly good long term strategy. Instead, focus on business processes that are important for achieving your business goals.

The next step would be to gather consistent performance metrics or data that shows your improvement overtime; followed by comparing your company’s performance metrics against the performance of other companies in the same or similar industries, while analyzing the data at every step of the way.

Record your data analysis and develop an implementation plan to maintain business processes that meet the benchmark, and develop strategies to improve processes that aren’t performing as well based on your observations.

The Volaris Difference

At Volaris, one of our biggest advantages is that we have a whole bunch of businesses under the Volaris umbrella, which have similar business challenges. This gives us the opportunity to benchmark our businesses against themselves, and also provides our businesses the opportunity to learn from each other, by interacting with leaders who are doing well at a particular benchmark.  

Figuring out “how” other businesses are successful at a particular part of their business, allows businesses who might not be doing so well in that area to take those best practices and implement them back into their own business. 
This helps foster a growth oriented learning environment where everyone can help each other improve and become more successful by benchmarking, and looking at some quantifiable numbers.

Remember

In order to benchmark successfully, avoid benchmarking too many things initially. Select a few areas that you have the ability or willingness to improve, and then gradually add other areas to improve on over time. You also need to remember to adjust the benchmarks as your business priorities change, and ensure that you are monitoring your performance metrics consistently.

Your Turn

Is benchmarking a common practice in your company? What has your company done to improve their performance over the years after observing other companies? Let us know in the comments below or reach out to us on Facebook, Twitter, LinkedIn, and Google+.

About the Author

Brian Beattie

Brian Beattie is the Chief Financial Officer at Volaris Group. Besides overseeing the financial health of the company, he works closely with Volaris’ legal and M&A team on all new acquisitions. Brian is an expert on every stage of the M&A process – from sending out the non-disclosure agreement to executing the sales purchase agreement.

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