KPI 101

 

Performance indicators may be:

• Leading: if they are predictive of success or failure.
• Lagging: if they reflect success or failure after the event.
• Coincident: if they change approximately the same time and in the same direction as a project as a whole.

The management of a particular situation, however, will often require a combination of more than one of the above. Performance indicators should be actionable in the sense that when an indicator reflects a situation or change that exceeds a pre- agreed tolerance, managerial intervention or corrective actions should be possible.

All KPIs are based upon measurement. Performance indicators can be qualitative or quantitative. They can be precise and measurable to a high degree of mathematical accuracy or may need to be based upon expert or collective opinion.

 They can be:

• Binary or absolute: these are in effect ‘yes’ or ‘no’ measures, and they are indicators of whether a ‘desired state’ is present or not. 
• Comparative: these take the situation as it is and measure it to against a relevant and anticipated state. Ex:

                - comparisons of cost, savings, efficiency gains, etc actual against budgets or plans

                - comparison of system development progress with pre-approved schedule

                - comparison against industry or sector benchmarks

                - comparison against known result for the organization for a similar period or event or project.

• Trend based: these measures require the collection and presentation of comparative information across a period of time. Examples of trend based indicators include:

                - systems performance

                - software development performance against schedule

                - software maintenance backlog

                - costs: particular cost per user.

 

The use of KPIs can range from measuring the achievements of a department in relation to a business area or the enterprise overall. In relation with the context we can have:

• Planning and investment indicators
• Output indicators: cost of a specific deliverable or functionality relative to plan, budget or benchmark, functional capacity relative to plan, budget or benchmark, usage factors, system downtime expressed as a percentage for all time and/or peak business hours, etc
• Outcome indicator: user take up rate of a new online service, customer satisfaction, stakeholder satisfaction, benchmark comparisons with comparable agencies or private sectors organizations.

 

Performance indicators are required to support a wide range of strategic, tactical and operational context. In this respect, the KPIs main categories of use are: investment, financial, human resources, services, procurement and contractual, development, training& support, operations, systems, risk management, management and governance, etc.