Analytics that answer a question: five measures for every ESD programme

An ESD programme can score full points and still fail the businesses it was meant to build. The reason sits in how the element is measured. Under the generic Codes, enterprise and supplier development is the largest part of the B-BBEE scorecard, with 42 points plus 4 bonus points. Enterprise development carries 5 points, with a target of 1% of net profit after tax. Supplier development carries 10 points, with a target of 2% of net profit after tax. Preferential procurement carries 27 points. Each of the three parts has a 40% sub-minimum, and because ESD is a priority element, missing one costs you a level.

Almost all of that is measured in rand spent against a target. Spend earns the points. But a programme measured only by spend tells you how much you gave, not what it achieved. Plenty of ESD dashboards show contributions by month, by beneficiary and by type, in colourful detail, and still cannot answer the question a board eventually asks: is any of this working?

Useful analytics start with a question. We use five measures that, between them, answer the important ones.

Baseline: where each beneficiary started

Nothing else can be measured without a starting point, and the starting point is what tells you what progress would mean for a particular business. When a business joins the programme, record its position: annual turnover, number of employees, profit or loss, B-BBEE level and ownership, its main customers and the areas where it needs support. Take these from documents, such as financial statements or management accounts, rather than from a conversation.

A baseline captured a year after a business joined is a reconstruction, not a baseline. If some beneficiaries do not have one, record their position now and date it honestly.

Growth: whether the business is stronger

Track the same measures as the baseline at regular intervals, at least once a year and ideally every quarter: turnover, profit, employees and the spread of customers. Compare each beneficiary with its own starting point, not with a programme average. A very small business that has doubled its turnover and a larger one that has grown steadily may both be doing well. Over time, this is the measure that shows whether your support is changing the direction of these businesses.

Jobs: whether the support has created work

Count the jobs created in beneficiary businesses since they joined, measured against their baseline headcount. Record permanent and temporary positions separately, and keep the evidence, such as payroll records or employment contracts. The Codes award a bonus point for jobs created directly as a result of enterprise and supplier development initiatives, so this measure can matter to your score as well as to your account of what the programme has meant for employment.

Graduation: whether beneficiaries are moving up

ESD is designed around a path. A business supported through enterprise development grows into a supplier, and in time into one that wins work on its own merits through preferential procurement. Track each beneficiary's stage and the date it moves. The Codes recognise this path with a bonus point for graduating one or more enterprise development beneficiaries to supplier development. A programme where nobody graduates is supporting the same businesses indefinitely, whatever its spend says.

Dependency: whether the business could survive without you

This is the measure most programmes leave out, and the one we think matters most. For each beneficiary, track what share of its revenue comes from your company and what share from other customers. A beneficiary that earns nearly all its income from you is fragile. If your needs change or the contract ends, the business may not survive, and the jobs and growth you recorded go with it.

A falling dependency ratio over time is one of the clearest signs of a programme that works. It means the business has found other customers, using capability your support helped to build. A rising one means you are building a captive business, however good the other four measures look.

Making the measures reliable

These measures are only as good as the data behind them, and ESD data is often collected late and by hand. Capture the baseline at onboarding, as part of the application process, not afterwards. Collect updates on a fixed schedule, using the same definitions each time. Link every figure to its source document, so that your verification agency or auditors can check it. And keep each beneficiary's financial information behind role-based access, because most people need only programme totals.

AI can take much of the collection work: reading management accounts and certificates as they are submitted, extracting the figures and flagging updates that are overdue or out of line with the previous period. A person confirms the figures before they are used.

From spend to outcomes

Spend against target earns points, and it should be tracked carefully. The five measures tell you whether the money is doing what it was meant to do. With them, an ESD report becomes an account of what changed, and a board has the evidence to keep funding a programme that works or to redesign one that does not.

We build ESD programme trackers that record each beneficiary, the support given and its progress against a baseline, set up around each client's programme and designed to run on the client's own systems. If you would like to see your programme measured this way, write to us at sales@bsvision.co.za.