Developing An Effective KPI Plan

November 29, 2010 from Dashboard Insight – “When looking at the BI landscape and available solutions, dashboards give the biggest bang for their buck. After all, with high levels of interactivity, strong data visualizations, and general capabilities that provide the quickest way to monitor performance and manage what is happening within the organization, it stands to reason that dashboard use would be gaining in popularity.  Despite the positive aspects of making BI and analytics easier to access and to interact with, the reality is that effective dashboards don’t design themselves. Simply implementing a dashboard and monitoring metrics does not mean that decision makers will benefit from their use.  Businesses require an effective action plan that ties into the organization’s vision in order to drive long-term success…

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180 View – There is some useful discussion. I would add that metrics should be SMART – Specific, Measurable, Actionable, Relevant, and Timely. Without being specific, the numbers are ambiguous and there can be many ways to interpret the results. You should not choose metrics that are can’t be measured accurately or take a huge effort to obtain. Actionable means that the metric is easily understood and that it ties back to a specific team that is being measured. Relevant metrics are linked to strategy. Companies that need to wait a month or more for their metrics are in deep trouble. Real-time should be the goal, but accuracy objectives will cause a delay to make sure the numbers are right. You should be shooting for days – not weeks.

As well some measurements are inherently lagging indicators, which tell you about historical results – sales, gross profit, customer satisfaction… The most important metrics are leading indicators, which foreshadow things that could happen. For example rising error rates in shipping or longer time to ship often precede declining customer satisfaction.