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BA Techniques: Metrics and Key Performance Indicators

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Purpose

Metrics and Key performance indicators measure the performance of the solutions, solution components, and other matters of interest to stakeholders.

Business Analysis Body of Knowledge® (BABOK®)

The metric within the key performance indicator helps to track the performance and progress of the project and the key performance indicator is used to measure the success of the project. Many companies uses the key performance indicator to measure the performance of specific business metric that is valuable to the business growth. These indicators are measured over time and it varies for one department to other. Both the metrics and the key performance indicators are essential for the success of the business. There is a difference between metrics and key performance indicators, where metrics will track and provide data to the organizations standard business processes, and the key performance indicators are the key measures that will have the most impact in moving the organization forward.  

A metric is a quantifiable level of an indicator that an organization uses to measure the progress. An indicator identifies a specific numerical measurement that represents the degree of progress toward achieving a goal, objective, output, activity, or further input. The key performance indicator is the one that measure the progress toward the strategic goal or objective. Reporting is the process of informing the stakeholders about the metrics and indicators in a specified format and at the specified interval.

Metrics and reporting are the key components of monitoring and evaluation.

  1. Monitoring is a continuous process of data collection used to determine how well a solution has been implemented as compared to the expected results.
  2. Evaluation is the systematic and objective assessment of a solution which is used to determine the status and effectiveness in meeting the objective over time and to identify the ways to improve the solution to better meet the objectives.

Some of the articles related to Metrics and Key performance indicators techniques are as follows,

The metrics and key performance indicators is a measurable value that demonstrates how effectively a company is achieving the key business objectives. Many organizations uses this to evaluate their success in reaching their targets. The key performance template is used to develop completely a new KPI or to improve the effectiveness of the existing KPI. The main elements used in metrics and key performance indicator are,

  • Indicators - An indicator displays the result of analyzing one or more specific measures for addressing a concern about a need, value, output, activity, or input in a table. A good indicator has six characteristics. They are,
  • Clear
  • Relevant
  • Economical
  • Adequate
  • Quantifiable
  • Trustworthy and Credible
  • Metrics - They are the quantifiable levels of indicators that are measured at a specific point in time. It can be a specific point, a threshold, or a range. The target of the metric is to reach the goal within a specific period of time.
  • Structure - The structure of the metrics and key performance indicator establishes the monitoring and evaluation system which requires,
  • Data collection procedure - It covers unit of analysis, sampling procedures, data collection instruments to use, collection frequency, and responsibility for collection.
  • Data analysis procedure - It specifies both the procedure for conducting analysis and data consumer, who may have strong interest in how the analysis are conducted.
  • Reporting procedure - It covers the report templates, recipients, frequency, means of communication
  • Collection of baseline data - It is the data provided immediately before or at the beginning of the period of measure. It is collected, analyzed, and reported for each indicator.

There are three key factors in assessing the quality of KPI, which includes reliability, validity, and timeliness.

  • Reporting - It compares the baseline, current metrics, and target metrics with calculations of the differences presented in both absolute and relative terms.

Some of the books for Metrics and Key performance indicators techniques,

Written by Bharath Ravi

Business Consultant whose qualification includes a Bachelor’s degree in the field of Mechanical specialized in Automobile & Manufacturing; Trained in Certified Supply Chain Professional (CSCP) Certification, Hands on Foundation Certificate in Business Analysis, BCS (UK) and Certified Professional for Requirements Engineering (CPRE-FL).

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