It seems as if everybody that is associated with business intelligence (BI) these days - no matter how remote the association - has something important to say about key performance indicators (KPIs). Unfortunately though, much of what is being written about business performance measurement leaves me uninspired and wondering if most of the BI industry is not just rehashing and repackaging the same ideas over and over again. While no discussion of performance management and BI dashboards is complete without a thorough discussion of KPIs, these discussions need to focus more on the proactive side of BI and examine performance metrics from a broader perspective.
The quest for decisive and actionable business metrics must not begin and end with KPIs alone. Quality management frameworks must help proactively mitigate risks and be predictors and harbingers of future achievement in addition to their examination of past operational performance. There is no doubt that when properly defined, KPIs are eminently effective for measuring if companies are meeting strategic and tactical goals throughout their supply chains and sales channels; however, they don’t provide enough intelligence into the day-to-day processes which drive a business’s performance. In addition, they will often fall short in providing a detailed insight into the human resources and technologies that carry out a company’s most important business activities.
With the weaknesses of KPIs exposed, I would like to proffer for your consideration the concept of key performance drivers, or KPDs for short. At their essence, KPDs capture information about what is truly driving and stimulating a business entity. KPD metrics provide leading indicators to businesses about business processes, assets and resources, as well as their probable impact (good or bad) on future and current business goals and KPIs. They help proactively identify processes that are at risk, and processes that are in alignment with corporate best practices. From a performance dashboard perspective, KPDs are instrumental in performing cogent what-if analysis, which can empower the real-time tweaking of critical operational behaviors.
For some time I have been intrigued by the research and writings of Wayne Morris, who has been espousing the benefits of key performance drivers. In case you have not heard of Wayne, he is the CEO of myDIALS, a leading-edge performance management and dashboard company with headquarters in Australia and the United States. [For more information on Wayne and his company you can visit their website at www.mydials.com.] Wayne truly understands that current performance methodologies are lacking - that they need to better predict the future while helping ensure real-time conformance to company best practices and policies. They must ultimately bring more value and innovation to business processes and quality management frameworks.
In a phone conversation with Mr. Morris last month, he wasted no time getting to the point and intimating his KPD mission statement: “Performance drivers must be considered when putting into place any sort of continuous improvement model. All performance targets, goals and best practices are the result of some primary driving business influence or criteria which must be understood in order to gain a competitive advantage. My goal is to give customers a performance management platform that delivers the key performance measures and drivers to support the continuous improvement models.”
Once key performance drivers are integrated with key performance indicators in a quality management framework, an effective alignment of tactical processes and strategic goals is realized. While KPIs are more about tracking status and results, KPDs help define the point-by-point characteristics of a process, person or asset - information about business catalysts that will make or break a company’s bottom line and strategic objectives.
For example, detailed information about each employee’s education, technical know-how and miscellaneous value-added skills can help managers better determine where to utilize personnel and predict the success future departmental performance and service will deliver. This sort of information constitutes highly actionable knowledge that can be used to make massive improvements in performance as measured by corresponding KPIs.
About the Author
William Laurent is one of the world's leading experts in information strategy and governance. For 20 years, he has advised numerous businesses and governments on technology strategy, performance management, and best practices�across all market sectors. William currently runs an independent consulting company that bears his name. In addition, he frequently teaches classes, publishes books and magazine articles, and lectures on various technology and business topics worldwide. As Senior Contributing Author for Dashboard Insight, he would enjoy your comments at firstname.lastname@example.org
Copyright 2010 - Dashboard Insight - All Rights Reserved.