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Measuring Your Digital Transformation: How to Select the Right KPIs

Perhaps the biggest challenge with digital transformation comes not from the implementation itself, but from the quantification of those benefits. Is our process working? How much? What can we do to further improve our processes?2020 was the year digital transformation (DT) – the integration of digital technology into all areas of a business – shifted from a business catchphrase to an organizational necessity.

Labs of all types found themselves positioned, willingly or unwillingly, on the front lines of the DT revolution. The sudden need for massive increases in testing volumes affected pharmaceutical, biobanking, clinical and diagnostic testing labs, to be sure. But other industries such as the food & beverage sectors rushed to play catch-up as business practices transformed overnight in the wake of the pandemic.

Digital transformation and labs were made for each other. While adopting and implementing digital technologies can be complex, the benefits are potentially considerable. Unfortunately, the rush to transform – especially in a year in which overnight pivots became the norm – can impede the realization of such gains.

Perhaps the biggest challenge with digital transformation comes not from the implementation itself, but from the quantification of those benefits. Is our process working? How much? What can we do to further improve our processes?

The Role of KPIs

Successful measurement of an organization’s digital transformation rests solely on the selection of Key Performance Indicators (KPIs).

KPIs are defined as “the indicators of progress toward an intended result…[they] create an analytical basis for decision making and help focus attention on what matters most.”

Organizational KPIs are not successful if there is a failure to understand what is being measured…or what needs to be measured. Typically, KPIs measure performance and activities, such as projects, processes, products or services. Tracking KPIs to measure performance is good business practice for any organization, and particularly for a lab.

An organization’s laboratories tend to be ‘data factories’ which deliver outsized value for an organization but generating that data can be very expensive. This reinforces the need to provide precise and targeted metrics to maintain a high level of performance. In general, lab KPIs can track inventory, devices, environment, data and results.

How do you determine which metrics are important for the performance of the lab?

We recommend grouping KPIs into the following three categories:

  • Business-Related KPIs: What’s directly important for the business?
  • Lab Condition KPIs: What’s important to keep your lab operating effectively?
  • Data and Deliverable KPIs: How do your deliverables affect the downstream processes in the organization?

Business-related KPIs accordingly correlate your activities to time and money.   Using the example of a service provider, a lab would be very interested in tracking revenue, expenses and profits.

Your choice of KPIs will depend heavily on the specific type and function of your lab. Here, we’ll discuss KPIs in the context of one or more of the following examples:

  • A research lab in an academic setting
  • An industrial research lab
  • A contract service lab.

Business-Related KPIs

Regardless of which kind of organization you are running, the most important assets are money and staff. Business-related KPIs accordingly correlate your activities to time and money.

Using the example of a service provider, a lab would be very interested in tracking revenue, expenses and profits.

  • Revenue: how much revenue do you generate on a monthly, quarterly, or yearly basis?
  • Cost of sample analysis: how much do you spend on consumables, staff, and overheads per single analysis?
  • Revenue per sample/analysis: what is the margin on your analyses?
  • Time to perform the analysis: how much time do you need – from receiving a sample through notifying the customer of the results?

In the context of a research lab, business-related KPIs would likely differ slightly. Tracking expenses would be mission-critical to ensuring the lab operates within a research budget. Tracking income, which will be very limited, will be a secondary or even tertiary consideration. What would be examples of business-related KPIs for a research lab?

  • Number of commercial projects
  • Average project revenue
  • Allocated budget
  • Number of research grants
  • Average grant revenue
  • Number of full-time employees
  • Number of Master’s students
  • Number of Ph.D. students
  • Number of patents
  • Number of scientific publications.

Lab Condition KPIs

In this set of KPIs, the measurement is focused on how a lab is performing in terms of processes, inventory, and environment. Poor-performing components need to be identified quickly in order to be corrected in a timely manner. Examples of KPIs related to lab condition include:

  • Quality control
  • Time your staff spends at the bench
  • Turn-around-time for analyses
  • Uptime of devices
  • Total space and free space on ELN or LIMS storage
  • Uptime of an ELN or LIMS.

Other sets of essential KPIs regarding lab condition will focus on consumables and equipment status. While some devices will likely have internal sensors that can tell you about their performance, other don’t – and you will need to collect such data. Environmental monitoring in storage rooms, refrigerators and freezers, for example, fall into this category. Examples of KPIs related to inventory:

  • Monthly consumable use
  • Amount of wasted consumables
  • Consumable use per analysis
  • Free space in refrigerators
  • Consumables inventory size and reserve.

Data Collection & Deliverable KPIs

In the performance of day-to-day lab operations, organizations collect the bulk of KPI data in existing platforms, such as a LIMS, ELN or ERP. Avoiding paper and manual data entry is the key to achieving better outcomes for your KPI measurement in a digitalized lab.

Whatever solutions an organization selects to digitally transform operations, the ability to define, log, measure and track KPI data – either internally or from connected sensors – is mission critical. Routine tracking of KPIs is the only way to spot process flaws and potentially unoptimized performance.

Robust analytics solutions which provide at-a-glance dashboards – combined with the right KPIs – are essential for a successful digital transformation.

Read our white papers:

·       Navigating the Digital Transformation Journey

·       How AI-Powered Analytics Transforms LIMS Data into Valuable, Action-Ready Insights