28 – Metrics and Key Performance Indicators (KPIs)

We are familiar with rules in our lives. They are in our legal system, our games, our family, and of course business. ​According to BABOK, Business rules is a specific, practicable, testable directive that is under the control of the business. It serves as a criterion guiding behavior, shaping judgments, or making decisions

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Definition

Metrics and key performance indicators (KPIs) are the basis for the ongoing monitoring, evaluation, and reporting system that addresses business analysis work, the overall project, and the resulting solution.

Effective monitoring, evaluation, and reporting must address several elements: indicators, metrics, structure, and reporting.

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Indicators identify specific numeric measurements of progress toward achieving something, such as an activity or deliverable.

To measure a particular aspect of a project or solution, you must have at least one indicator.

The business analyst needs to know the source of each defined indicator, how to collect the measurement, the person or system doing the collecting, and how often it will be done.

Good indicators meet five quality characteristics:

  • Clear
  • Relevant
  • Cost-effective
  • Adequate
  • Quantifiable
Edit

A metric is a quantifiable level of an indicator. It is represented by a specific numerical measurement that reflects the degree of progress toward some type of achievement.

Metrics takes the form of a specific point, a threshold, or a range of values based on what is being measured. They allow the business analysis team or the project manager to track, assess, and report on the quality of business analysis work.

Three quality key factors for indicators and their metrics:

  • Reliability: Extent to which the data collection is stable and consistent.
  • Validity: Extent to which data clearly and directly measures the performance to be measured.
  • Timeliness: Fit of data’s frequency and latency to the management’s need.
Edit

KPIs are indicators that measure performance or progress of solutions. They also measure solution components toward strategic goals or objectives.

KPIs are 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.

Why use KPIs?

  • Ensure any business objective is achievable.
  • Help understand a business’ health and success.
  • Allow to make critical adjustments in execution of strategic and financial goals.
  • Evaluate a solution’s effectiveness and how it meets business needs and objectives.
  • Facilitate organizational alignment and link goals to objectives.
  • Assesses success in a meaningful manner.
  • Guide you through modifications and performance problems.
  • Maintain employees’ focus on initiatives and tasks.

  • Over-collection and reporting are expensive and takes away from other productive works.

    When metrics are used to assess performance, they encourage certain behaviours but discourage others. Individuals being measured are likely to act to increase their performance on those metrics, which is detrimental to the enterprise as a whole.

    Key features

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    • A good KPI tracks the performance of a particular business goal and makes it the priority of decision making. This helps the company attain larger objectives. Being closely aligned with key measurements allows you to concentrate on influencing elements to reach your goals.

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    Activities, processes, and tools used in a specific project are chosen appropriately. They work effectively to help you meet your goals and help you acknowledge which tool suits the process you are in. Proper KPIs prevents demotivation and frustration.

     

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    KPIs help you gauge the progress of your project, therefore allowing you to acknowledge and pinpoint pain points. They indicate areas where improvement is required. Thus, KPIs let you know when pain points are successfully managed.

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    KPIs allow individuals to not only analyze what they are doing, but what their colleagues are doing as well. This makes sure that each employee is working in the same way, which clarifies lines of communication. The way they are performing is packed into an explicit number instead of being hidden under spreadsheets or services. 

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    KPIs help teams to gauge how they are exactly performing. They don’t need to wait until the project ends to arrange the outcomes. Constantly tracking KPIs enables you to answer how, what, when, and why. This allows to constantly gain knowledge from every success and failure. 

    How to write and develop KPIs for your business​

    How to use the method of developing and writing KPIs

    SMART KPI

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    • tips and recommendations for use,
    • downloadable checklists and templates,
    • references for further reading,

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