| Key Performance Indicator |
Article Index for Key |
Website Links For Key |
Information AboutKey Performance Indicator |
| CATEGORIES ABOUT KEY PERFORMANCE INDICATORS | |
| managementmanagement | |
| ratios | |
|
A KPI is a key part of a measurable objective, which is made up of a direction, KPI, benchmark, target and timeframe. For example: ''"Increase Average Revenue per Customer from £10 to £15 by EOY 2008"''. Where 'Average Revenue Per Customer' is the KPI. KPIs should not be confused with a Critical Success Factor . For the example above, a critical success factor would be something that needs to be in place to achieve that objective; for example, a product launch. IDENTIFYING INDICATORS Performance indicators differ with business drivers and aims (or goals). A school might consider the graduation rate of its students as a Key Performance Indicator which might help the school understand its position in the educational community, whereas a business might consider the percentage of income from return customers as a potential KPI. But it is necessary for an organization to at least identify its KPIs. The key conditions before properly identifying KPIs are:
AREAS TO BE ANALYZED Some of the areas which top management analyses are: # Customer related numbers: ## New Customers Acquired ## Status of existing customers ## Attrition of Customers # Turnover generated by segments of the Customers - these could be demographic filters. # Outstanding balances held by segments of customers and terms of payment - these could be demographic filters. # Collection of bad debts within Customer relationships. # Demographic analysis of Individuals (potential customers) applying to become customers, and the levels of approval, rejections and pending numbers. # Delinquency analysis of customers behind on payments. # Profitability of customers by demographic segments and segmentation of customers by profitability. This is more an inclusive list than an exclusive one. The above more or less describes what a bank would do, but could also refer to a Telephone company or similar service sector company. What is important is: # KPI-related data which is consistent and correct. # Timely availability of KPI related Data. Faster availability of data is beginning to become a concern for more and more organizations. It usually took a month or two to sort through the existing data and summarize meaningful information, which might not be the best idea if you want to hit Wall Street targets. Of late, several banks have tried to move from availability of data at shorter intervals and lesser delays. For example, in businesses which have higher operational/credit risk loading (that involve credit cards, wealth management), Citibank has moved onto a weekly availability of KPI related data or sometimes a daily analysis of numbers. This means that data should usually be available within 24 hours at most times, necessitating automation and the use of IT systems to achieve this. CATEGORIZATION OF INDICATORS Key Performance Indicators define a set of values used to measure against. These raw sets of values fed to systems to summarize information against are called indicators. Indicators identifiable as possible candidates for KPIs can be summarized into the following sub-categories:
SEE ALSO |
|
|