Business Intelligence Key Performance Indicators
What are Key Performance Indicators?
Key Performance Indicators are also known as Key Success Indicators, they help an organization to better define and measure their progress toward professional goals. Once an organization has clearly identified its need, analyzed its mission, and defined its goals it will need a way to measure the progress toward those goals.
Key Performance indicators are those measurements. These indicators are measurements agreed upon before hand that reflect the critical success factors of a business or organization. They differ depending on the business, the business may decide to appoint the percentage of its income that comes from returning customers as a Key Performance Indicator, or a college may use the rate of students that meet graduations requirements as a Key Performance Indicator. No matter what Key Performance Indicators are selected they must reflect the business or organization goals.
This means they must be “key” or directly related to its success and they must be measurable. It is also a proficient way to ensure that a company is taking the correct steps toward realizing their goals for the organization’s success. When these indicators are set into place and used to measure what if any impact the decisions made are having on that specific area, the organization can then fine tune the plan of action and take the needed steps that will increase the success, profitability, or productivity of that area.
How does Key Performance Indicators work?
To assess the present state of an organization Key Performance Indicators are laid down, they help to analyze business success and plan a proper course of action. This system gives organizations the necessary information presented in a clear way. To define a complete and effective set of performance indicators companies need to be sure that the measures are simple, workable, and firmly in place. The greatest challenge comes with selecting the appropriate indicators to meet goals and building activities needed to meet the asset levels of performance. Choosing the right measures is very important to the effectiveness of a plan. Perhaps more importantly the system needs to be easily interpreted by all who will be expected to meet or surpass the indicators that will be put into place. This is so the current rate or position can be determined and then a plan to increase productivity or profit can be put into action. An organization needs to seriously review their professional needs before attempting to create a plan of action or setting Key Performance Indicators. They will also need to decide upon a way to monitor and review the data relevant to their asset goals.
Need of Key Performance Indicators
How helpful are Key Performance Indicators?
When an organization uses Key Performance Indicators to measure the productivity of their employees it can stimulate motivation for those employees to do well and “measure up” to the company expectations. When building performance metrics one must keep in mind the desired end result. This means the organization will need to focus on the outcomes of the process. Every business needs a strategy for effective measurement of performance. This includes a system that can track and analyze asset information for better business decision making. Key Performance Indicators can also be used in organizations for reasons other then employee productivity. They can be used to measure other areas such as increase in profit, measuring popularity, identifying trends, and even customer response. No matter what the need Key Performance Indicators serve to sole purpose of identifying and measuring a company’s progress toward a goal or set of goals. Using Key Performance indicators on all areas of and organization that need or could benefit from improvement is how most companies become the leaders in their particular area of business. When an organization stays on top of company needs whether they are financial or productive with the use of Business Intelligence and Key Performance Indicators they are found to be among the most successful. This is a way to monitor the success and the viability of a company and helps determine whether certain business ventures will or will not be lucrative.
How do Key Performance Indicators relate to Business Intelligence systems?
Business Intelligence applications are one way of monitoring and assessing the level of Key Performance Indicators being met. Business Intelligence systems compile data relating to profit, productivity, customer return, and marketing trends. With this information readily available managers and executives can review the data and put in place indicators as needed, then using the software on a regular basis they are able to assess the success rate of the plans they initiate. People managing a business or organization are often faced with issues that impact them. These business issues are normally easy to group into one of the following two categories: external factors or internal performance. External factors deal with changes in the economy, political or environmental events, activities, and customer behaviors. As if external factors are not enough, professionals must also deal with internal performance, this is so that the business will remain competitive and profitable. These factors directly affect business, financial, and operational functions. Such factors have the power to make or break a company. In situations involving either of these two types of factors a organization must have the ability to respond quickly, calling for all relevant information to be readily available in order to make quick decisions, that is where a Business Intelligence system comes into the picture.
How do we identify successful Key Performance Indicators?
The biggest part of creating a successful plan of action for an organization is identifying the area in which a business needs to improve upon, and then setting realistic yet advantageous Key Performance Indicators. By using a Business Intelligence system the organization can review large amounts of data from a wide array of areas. Then using this information they can decide upon what goals need to be met in order to achieve the desired level of success. After an organization has decided what areas of its business need improvement they must then move on to choosing which levels of improvement will be set as measurements. For example if a company who sold children’s books found that they were making more profit from return customers then new customers, they may want to include incentives that influence customers to keep returning. Once a plan was set and fully decided upon, the company would then design indicators to measure the percentage of new customers that become return customers, offering incentives such as a membership and member discounts until the desired amount of customers are using their company for their literature needs. Key Performance Indicators have been used for years and are being used more and more as economic need and technology grows. All types of businesses and organizations can profit and benefit from the correct use of Business Intelligence systems and Key Performance Indicators. The two go hand in hand to achieve a predetermined goal. If an organization makes informed decisions and designs Key Performance Indicators according to the information that a Business Intelligence system provides about their company, they can almost be guaranteed that they will achieve a much higher level of success.