Mark Flaherty (MF): You should start with a top-down approach, work with senior management to find out what they think the key performance indicators are. “Key” is important in order to come up with a finite number of truly important metrics. Eight to 10 is usually the right number. They should be chosen because they reflect “Performance,” and they are the ones that employees can affect with their actions and decisions.
Once you have those, that will germinate the development of deeper level KPIs at the operational and departmental levels. You can then break those measures out and rank them on a couple of criteria. First, which are the most important for getting the results they need to get? Second, you have to determine what is collectible. A lot of times companies start out having already a third of their desired KPIs being measured and monitored.
Then another third are sitting around here somewhere. They are in some operational databases that are not necessarily that easy to get to. But you can point your BI web reporting software at them, and you can get them. And then there is the final third, the data that you don’t collect, yet. So a big part of figuring out what measures you will settle on is determining which are the metrics that can be gotten that support the company’s goals and objectives.
Once you’ve done that identified that list of metrics, and you’ve got your performance management or KPI dashboard software installed, now you link up those metrics to scorecards and dashboards. Use the automated tools and ETL processes to get the data in databases if they are not already. A lot of times you might find that the second category of KPIs have been tracked in personal spreadsheets, so you’ll need some capability to get that data into the BI platform.
And you should get those KPI dashboards out the door first.