There’s a lot of talk these days about key performance indicators (KPIs). They are the backbone of scorecards and dashboards, which have become an irresistible way for organizations to present performance information to executives and staff. Unfortunately, BI developers seem to focus more on creating visual metaphors (dials, gauges, arrows, etc.) than understanding what constitutes a good KPI that delivers long-term value to the organization.
Part of the problem is that people use the terms “KPI” and “metric” interchangeably. This is wrong. A KPI is a metric, but a metric is not always a KPI. The key difference is that KPIs always reflect strategic value drivers whereas metrics may represent the measurement of any business activity.
When developing KPIs for scorecards or dashboards, you should keep in mind that KPIs possess 10 distinct characteristics. Although metrics may exhibit some of these characteristics, good KPIs possess all of them.
Read more of the 10 distinct characteristics at the tdwi.org website.