Defining KPIs

Updated: Nov 11, 2018

One of the worst things that a reporting team can deal with is a badly defined KPI... or a bunch of them. What can we you do prevent that?

It can often happen that in the hassle of a merger, changing service providers or rapid development, KPIs and SLAs are being defined and set without spending too much time analyzing what they actually mean and how are they going to be measured. After a while it turns out that they are either not applicable to the current setup, cannot be aligned and compared with equivalent BU metrics or simply do not make sense. This can later create a mess not only in the reporting team’s work, who will be trying to do an impossible task, but can lead to issues with the client, who for yet another month hasn’t received the agreed metrics.

So why does this happen? In the situations mentioned above many companies do not have enough resources to think about all the details. Let’s say that a firm wants to change its service provider. The exact metric definitions are often overlooked, since a set of KPIs already exist and detailed revision will only slow the whole process down. After a while though, it turns out that the systems the new provider uses are different and are unable to measure the defined KPI. This can result in an expensive and long process of adjusting the systems or discussing in meeting after meeting how it should be changed. Even a simple mistake such as setting a wrong target format can lead to complications, escalations and year long discussion.

So, whenever you find yourself in a KPI defying position, always make sure that the metrics can answer positively the following questions:

  • Does the KPI make sense (and what conclusions can you draw from the data)?

  • Is the KPI measurable (with the available and/or future setup)?

  • Is the KPI comparable (to equivalent BU metrics)?

  • Is the target aligned with the metric?

  • Is the KPI really necessary? Try not to set too many metrics. Stick only with those which will give you the best overall picture. For example, operational KPIs don’t have a place in a Quarterly meeting.

#Dashboard #Excel #KPI #SLA #KBI #Performance #Metrics


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