Published: November 10, 2020 | Comments
If you want to know whether you are measuring the right key performance indicators (KPIs), stop distributing your KPI reports and wait to see if anyone, whether they are business partners, other managers, your team, or the CIO, asks for them. If they truly are KPIs, your stakeholders will ask for them.
Key performance indicators or standard metrics?
A key performance indicator, by definition, is “an important metric used to evaluate the success in meeting an objective” (ITIL® Foundation, ITIL 4 edition, 2019). In other words, KPIs align with stakeholder goals.
Are your KPIs measuring success in meeting objectives? If you cannot answer that question or your answer is no, you may be providing standard metrics and not KPIs. Standard metrics are “metrics that only store and display one metric value for each date range” (Databox).
Too often, I see cases where KPI reports were inherited from previous leaders, written to satisfy a request from one person (ages ago), or used because they were provided by a tool. I have also seen KPI reports that are built on “easy-to-collect-metrics,” or are showing a single metric instead of telling a story. It is unlikely that these reports provide sufficient information to drive action or show business value.
Furthermore, these reports are usually written from a narrow perspective and show how efficiently the specific section is operating, instead of aligning with goals and measuring progress or showing the delivered value from a stakeholder perspective.
Too often, to define KPIs we start with the data and canned reports that our tools provide. This usually results in reports and metrics that have limited value. Here are some steps to reverse your approach to create KPIs that provide more value:
Step 1 – Ask the questions.
Reversing your approach starts with the right questions (before considering the data). For example:
- What do your stakeholders want to know?
- What are the business goals in various areas of the organization?
- What are critical business processes and how do they impact the business?
- What problems is an initiative or process trying to solve?
- What goals have been set for the initiative (practice, procedure, project, etc.)?
- What results have we seen from recent improvements (and their impact on the business)?
Keep value co-creation in mind. Any questions regarding business goals, needs, or questions require answers from all stakeholders. In other words, ask, do not assume. Most likely, your stakeholders already have questions they would like to have answered or goals they are working toward in their respective areas.
Step 2 – Understand the current workflow.
Observe the current workflow and business practices and learn from the stakeholders about what works well, as well as what is needed to do their jobs and meet their goals more consistently and effectively. This will lead to identifying needed KPIs to measure progress and success.
Step 3 – Look at existing metrics and reports and determine how to monitor, measure, and effectively communicate KPIs.
Once workflow, goals, and value are defined and understood and KPIs are identified, it’s time to look at existing metrics and reports. Are you measuring progress toward these goals today? Are you currently measuring and promoting value realization? Often, you have the data, but have not combined different metrics to “tell the story”. Another possibility is that you have trending reports that answer the question at a high level, and you then need to take a “deeper dive” into metrics to provide more specific answers.
If you do not currently have reports that answer the questions, determine what data would be needed to “tell the story” or provide the answers. Then, design KPI reports that measure against the goals.
Keys to KPI success
Regardless of the industry or business drivers, it is essential to partner with stakeholders to focus on value and business goals instead of defining “metrics in a vacuum”. Although operational and efficiency metrics are important, they do not stand alone. KPIs are necessary to show progress, success, and value. By starting with the right questions, you can more accurately and successfully provide “metrics that matter” and truly measure goal achievement and business success.
This story first appeared in a newsletter for itSMF International.