KPIs – Who Am I and Where do I Come From? (Part 3 of 6)
01. Jun, 2009 
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Well, back again. It has been a while. Today I’d like to move onto the subject of KPIs. What is a KPI you say? A Key Performance Indicator is a measure of how well (or poorly) targets were met, for example, a KPI might be Profit Variance -if we have $92,000 profit for the year and we had a target of $100,000 we have a variance of -$8000. Not good. So on our dashboard, our Profit Variance might have a red stoplight to graphically show our performance.
Or would it? It may be that we allow for 10% leeway before we say that our variance was bad. So in our example, we would actually have a green light, or maybe orange. We would only get a red light if our variance was greater than -$10,000. Let’s face it; we’re still making money, just not as much as we had hoped.
Did you notice that I didn’t say “Revenue” was the KPI? In fact, I said that the performance of Actual Revenue to a target is the KPI i.e. the variance. This is important. KPIs measure PER-FOR-MANCE.
So, a KPI measures how well we performed against a given target.
That makes sense right? So what’s the fuss about scorecards and KPIs and all that? Well… balanced scorecards are designed to show overall performance of the organisation. Not just easily quantifiable things like Profit Margin. And how do you compare, equate and aggregate information such as Employee Satisfaction, Customer Satisfaction, Operational Effectiveness, Environmental Sustainability and Profit Margin altogether?
Where do I Come From? |
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Now we get down to the meat of it. And what this has to do with SharePoint. Someone, somewhere has to actually physically build our KPIs, store them, access them and use them.
What are My Options?
I know I’m biased. I like PerformancePoint. It integrates nicely with technologies that I’m already using (SQL and SharePoint). And I like that it’s gonna be bundled with MOSS. So sue me (no, don’t really)… * user interface |
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Who Am I? |
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Profit – What Else is There? I could give you a massive list of KPIs, but I ain’t gonna. Check out the EPM Review. They have an EXHAUSTIVE list of common KPIs. It’ll knock your socks off… or provide just the impetus you’ve been needing to clean out your garage. Who am I to judge? Just remember this… you want to measure performance in all areas that are important to you. While there is some commonality across organisations, there is by no means uniformity. This means, the very first thing you’ve got to do, is consider your organisations values, mission and strategic plan. This will guide you on what’s important FOR YOUR ORGANISATION. Once you know what you want to achieve, then you need to identify what data you already have that can be used to quantify those areas. Then consider, what data you could capture but don’t already have. Finally, don’t forget to think through and identify what data you can’t capture. It may be just as important to know what’s missing. How Long is a Piece of String Defining targets is not as simple as it seems initially. Again, this is something you need to think through at the outset. Targets could be manually entered values, but based on what? It could be as simple as Revenue Last Year + 4%. But someone somewhere has to decide how many percent, and whether that base revenue number should include Revenue from discontinuing entities, or interest or a number of other factors. The fact is, you need to think this through separately for each and every KPI. |
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Getting on the Merry-Go-Round |
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Common issues you will face when designing your KPIs…
Defining the KPI Weighting the KPI Some KPIs are more important than others. Well, maybe not more important but certainly the impact on the organisation of poor performance, or conversely good performance, is more greatly felt. So we need to identify what matters. Again, getting everyone to agree can be challenging. But this is an important thought process and should be well considered before jumping in the deep end. It helps to look at your strategic plan and that may point you in an appropriate direction. Too Many KPIs I see this time and time again. How do you hit the bullseye when you’re aiming everywhere? It’s got to be achievable, not the KPI targets but the project itself. Getting a scorecard up and running is challenge, no doubt about it. But getting people to use it, now that’s the real challenge. So start small. I’ll say it again. Start SMALL. Did you miss it? START SMALL!! Get users comfortable with a few key areas before you throw a thousand or a hundred or even 50 KPIs at them. They just won’t read it. They won’t understand what they are looking at. My suggestion, seriously, start with 10 at the most. I know there are BAs and scorecard developers out there looking at me in stunned silence (well, reading at me in stunned silence… or perhaps not, perhaps you are yelling at the screen (if so, ask yourself why because I can’t actually hear you). Of course, you can revisit it later… just don’t start with information overload. That’s all I’m saying. |
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Part 1 – Getting to Know You – Intro to SharePoint BI | |
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Part 2 – Sell! Sell! Sell! Why Build a Dashboard Anyway? | |
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Part 3 – KPIs – Where do I Come From? | |
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Part 4 – Dissecting Dashboards | |
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Part 5 – We Really Need to Talk – Scorecards & Reports | |
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Part 6 – Beware the Bogeyman – Securing Dashboards | |
Siyonara amigos! Till next time.
Kristen Hodges, MCTS, MCITP
http://www.bi-tch.blogspot.com
http://b-iq.org
References
http://www.epmreview.com/KPI-Library.html
http://nickbarclay.blogspot.com/search?updated-max=2008-01-09T15%3A44%3A00-05%3A00&max-results=20
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