What is a KPI? The answer depends on who you ask. For most IT and Business Intelligence people, a KPI is simply a number representing performance for a specific process, domain, or subject. But a KPI is more than a number. It should tell a performance story.
A good KPI story contains most, if not all, of these 13 elements:
- Quantitative aspects of the KPI — such as Actual, Target, and Best Performance
- KPI card — with description, owner, data source, frequency, intention, thresholds, and much more
- Charts — showing the visualized performance of the KPI in a context such as time
- Analysis — that shows the build-up of metrics from which the KPI is derived — this is often displayed via “drill down” capabilities
- Benchmarks — to see show how an entity is performing compared to the competition (or as compared to internal benchmarks)
- Written assessments — from the KPI owner of his / her evaluation of performance
- Corrective actions — to get back on track if performance has deviated
- Initiatives — to improve performance and reach the defined target set for the KPI
- Context — If the KPI is a part of a value driver tree, it should also be shown in the context of the value driver tree
- Governance rules — what will happen if KPI is not performing? Will there be notifications, processes to initiate escalations, approvals?
- Analytics — what has caused the current performance level? You should be able to explore and analyze the performance as well as perform “what if’s” and conduct even more analysis to gain knowledge on where resources should be allocated to improve performance
- Risk factors and risk mitigation plans — every KPI can be subject to unexpected risks. What are they? What can we do to mitigate the risk factors, if they occur?
- Linkages to overall business context — no KPI stands alone. It is a part of something “bigger” such as a process or a part of a strategy. Therefore, the KPI needs to be put into this specific business context
Not every KPI must have all 13 elements, but certainly, every element should have been considered. At Corporater we believe that ‘A KPI is more than a number’, and that is why we enable our customers to use the rich Business Management Platform to tell their unique KPI story.