Key Performance Indicator

A metric of the business that is used to help estimate the level of performance.

The challenge that many complex businesses face is that directly measuring efficiency or any other interesting parameter is too time consuming and costly. For this reason they often use a combination of other indicators in order to estimate these values. These metrics, because they directly affect the public view of the business, become very important to the executives responsible for the operation.

There are two different issues that commonly arise from this approach. First the KPIs are often based on some Business Intelligence measurement, that itself has consolidated different measurements. The way this is done must be careful to compare like with like, otherwise the resulting value will be meaningless.

The second, and more important issue has to do with focusing on improving the metric rather than the thing it is measuring. For example ambulence services in the UK were recieving complaints about the length of time it was taking to respond to calls. The government decided to publish a measure of response times, and to offer benefits to the most efficient services. In the following years one group managed to achieve response times that were negative, a rather impressive improvement! It soon became apparent that there was a problem with the KPI being used, this particular authority was measuring the time from when the phone call requesting the ambulence stopped until the arrival of the vehicle. Of course the easiest way to improve this number is to ensure that all callers requesting an ambulence are kept on the line until after it arrives. The metric can be improved without benefiting the patients at all, not quite the aim of the KPI.

Relationship to Information Architecture

It is quite common for an Information Architecture to be exploited for purposes beyond its original intended use. For example being used as the basis of KPIs. This can be an issue both because the structure is being exploited in unintended ways and because as soon as a metric is part of a KPI it is liable to be manipulated in unanticipated ways.

These issues can be addressed early by clearly stating the limitations of the information shapes that you define. For example if the validity of an estimate depends on the metrics being unbiased then make sure that is explicitly stated.

Links to this page

The following pages link to here: Capability Maturity Model, Enterprise Architecture