This means we are trying to assess overall performance versus just gathering statistics, counting, and collecting all possible (and sometimes meaningless) data. Typically, the metrics that rise to the level of KPIs are those that indicate whether an organization is executing its strategy or not. What KPI to choose is predicated upon what question you are trying to answer – what mystery door you want to open. We always give the same answer: “the KEY performance indicator that you are looking for is dependent on the DOOR that you are trying to open.”įor example, are you trying to find the key metric to assess if your client is fulfilling its chosen customer value proposition? Or are you looking for a key metric to assess if the throughput or quality of a process has improved?
Consequently, we’ve had numerous consulting firms ask us what set of KPIs they should use for an industry.
#Acronym kpi stand for software
An analogous definition when considering if a metric is “key” or not, is to think about what you are trying to unlock – what door you are trying to open.Īs a software vendor that helps our clients manage performance, we’ve been privy to LOTS of metrics. We’ve seen too many companies fall into a common KPI trap in which they try to measure everything that moves.Īll things that “move” are good potential metrics, but the question is: Is it KEY? How do you know? An easy way to think about this is to think about the definition of “key” when used as a noun.Ī key is an object that is used to unlock something. This implies the metric is important – one of a select few. However, when you think about it, what makes one metric versus another rise to that special class known as KPI? The answer lies in the deeper meaning behind each word in the “KPI” acronym. Then, what is so difficult to understand about those 3 little words? Yet how many times have you struggled to understand or to explain what is meant by “KPI”? On the surface, it seems simple enough – Key Performance Indicator. KPIs are a vital part of any Performance Management or Strategy Execution system.
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