Database Reference
In-Depth Information
from a customer's perspective, and with respect to employee's expecta-
tions.
3. Brainstorm possible metrics to discuss many possible measures before
deciding the final set.
4. Prioritize the initially defined metrics. In order to do this, for each metric,
we must:
Give its precise definition.
Define if the indicator is leading or lagging. It is recommended to have
an even number of leading and lagging metrics.
Verify if the metric is likely to have a relevant impact.
Check if the metric is linked to a specific set of business processes that
we can drill into if it deviates from the desired values.
Check if we have at least one to two metrics for each key category
defined in the second step.
5. Perform a final filter on metrics. This consists in checking if the metric
definition is unambiguous and clear to people not on the core team, if we
have credible data to compute the metric, and making sure that achieving
the metrics will lead to achieving our goals.
6. Set targets for the selected metrics. This is a crucial step since it is one
of the biggest challenges in KPI definition. For this, historical information
can be used as a guide against which the core team can look at industry
benchmarks and economic conditions.
Finally, we give a set of conditions that a KPI must satisfy in order to
be potentially useful. The conditions below consolidate a collection of good
practices usually found in the literature:
The metric must be specific and unambiguous, which means the definition
of the indicator must be clear and easily understandable. In addition, the
definition must precisely specify how the metric will be computed. In the
Northwind case, for instance, an indicator called
Sales Performance
could
be defined as the total value of the
SalesAmount
attribute in the
Sales
fact table, computed over the current quarter, divided by the value of the
attribute for the same period last year. This ratio is then compared against
an expected sales growth value set as a company goal.
The indicator must be clearly owned by a department or company oce,
which means there must be an individual or a group that must be made
clearly accountable for keeping the indicator on track.
The metric must be measurable, which means all elements must be
quantifiable.
The indicator can be produced timely. To be useful for decision making,
we must be able to produce a KPI at regular predefined intervals, in a
way such that it can be analyzed together with other KPIs in the set of
indicators.
Search WWH ::
Custom Search