KPI — Key Performance Indicator
As a business analyst in an IT project is to ensure that all requirements of the client are captured and analyzed. They should identify the key problems and then recommend the most optimum solution so that the client’s organization achieves its objectives. So, to ensure whether we overcome the problem or to identify risk factors we need some measures. A KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives. Hence, for a Business Analyst, it is important to set effective KPIs.
KPIs is a form of communication used by individuals and organizations to evaluate their success at reaching critical targets.
High-level KPIs may focus on the overall performance of the enterprise, while low-level KPIs may focus on processes within departments.
A performance indicator has to use the SMART criteria. The letters are typically taken to stand for Specific, Measurable, Attainable, Relevant, Time-bound. SMART criteria can also be expanded to be SMARTER with the addition of Evaluate and Reevaluate.
* Evolve your KPI to fit the changing needs of the business
* Make sure the KPI is actionable
* Review the KPI on a weekly or monthly basis
* Update your KPI objectives as needed and it’s an iterative process that involves feedback from analysts, department heads and managers
* Share your KPI’s or updated KPI’s with stakeholders
* As this factfinding mission unfolds, you will gain a better understanding of which business processes need to be measured with a KPI dashboard and with whom that information should be shared
Making your KPIs actionable is a five-step process:
1. Review business objectives
2. Analyze your current performance
3. Set short and long term KPI targets
4. Review targets with your team
5. Review progress and readjust
A KPI report is a presentation that summarizes your current performance compared to your objectives. It can be presented in a variety of ways, from spreadsheets and slide decks to formal written reports and, as we prefer, dashboards.
KPI Dashboard
A KPI dashboard creates a real-time visualization of the KPIs you’ve selected. The best KPI dashboards are customizable, allowing you to, among other things, change colours, organize your KPIs, and see your progress in a single glance. A KPI dashboard provides you with an at-a-glance view of your business performance in real-time so you can get a better picture of how the entire organization is doing.
Common terms found in these dashboards include:
Key risk indicator (KRI): a measure used in management to indicate how risky an activity is. Key risk indicators are metrics monitored by organizations to provide an early warning of increasing risk exposures in various areas of the business.
Critical success factor (CSF): is a management term for an element that is necessary for an organization to achieve its mission. Critical success factors should not be confused with success criteria. Success criteria are most commonly used in project management to determine if the project was a success or not. Success criteria are defined with the objectives and can be quantified by using KPIs. An example for CSF can be “Customer is always right” which targets customer satisfaction and respect for the customer
Performance metrics: measure an organization’s behaviour, activities, and performance at the individual level and not organizational level. For example, an individual who works in a call centre may have performance metrics such as Number of Calls Answered, Average Wait Time, Number of Successful Calls Processed, and Average Length of Call.
Example
What is your desired outcome? To increase sales revenue by 20% this year
Why does this outcome matter? Achieving this target will allow the business to become profitable
How are you going to measure progress? Progress will be measured as an increase in revenue measured in dollars spent
How can you influence the outcome? By hiring additional sales staff, by promoting existing customers to buy more product
Who is responsible for the business outcome? The Chief Sales Officer is responsible for this metric
How will you know you’ve achieved your outcome? Revenue will have increased by 20% this year
How often will you review progress towards the outcome? Will be reviewed every month
Happy Learning!
Sivaranjani
