1. The Organisation As A System An information management framework
Information Delivery – KPI’s
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2. Key Performance Indicators
Some Concepts
KPI’s are not “Indicators” until they are linked to objective(s) and are used cumulatively to show progress towards meeting it/them. Until then, they are merely measurement metrics
Indicators are used to provide measurements of the defined priority and key success factors of a project or system
KPIs measure the quantifiable performance of an activity that is critical to the success of an organization
A properly defined and designed scorecard and KPI mechanism forms the basis of one of the strategic information management dimensions of the organisation
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3. Key Performance Indicators
The Purpose of KPI’s
The primary purpose of a KPI is to detect, monitor and illustrate variance in behaviours in processes, with a view to reducing variance to acceptable limits.
At the point at which variance is reduced or eliminated, then the process that a KPI is monitoring should be running at optimum efficiency.
However, they are “INDICATORS” not the sole authoritative source of information. Therefore, they should trigger investigation as to why extremes of behaviour have been transgressed.
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4. Key Performance Indicators
KPI’s Are Not...
Performance targets
Objectives
Strategy
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5. Key Performance Indicators
KPI’s
Are decision support aids
Should be evidence based using supporting data where such data exists
May be related to each other both top down and laterally
Should be capable of being linked to each other to present perspective based view of organisational performance that are not necessarily based on the organisation management structure
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6. Key Performance Indicators
KPI’s
KPI provide objective evidence related to the probability of the achievement of Vision and Mission based objectives.
KPI’s provide one of the most significant links available to an organisation between strategy and process
Part of the descriptive attributes of a KPI should be the means to link a KPI to other information dimensions the organisation may have identified.
KPI Data collection should be as unobtrusive as possible, where data collection does intrude on normal operations, it should require minimum additional effort to complete satisfactorily
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7. Key Performance Indicators
KPI’s
KPI provide objective evidence related to the probability of the achievement of Vision and Mission based objectives.
KPI’s provide one of the most significant links available to an organisation between strategy and process
Part of the descriptive attributes of a KPI should be the means to link a KPI to other dimensions the organisation may apply.
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8. Key Performance Indicators
KPI Measurement Principles
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9. Key Performance Indicators
Principles of Measurement
Two classes of measurement
Quantitative (the number of things produced)
Qualitative (fitness for purposes)
For each class of measurement, there is a need to determine the achievable mean value that a process being monitored is expected to deliver.
There will be several types of variance that can be applied to the mean:
Better than average behaviour
Worse than average behaviour
Because of the impact of “better than” or “worse than” behaviour, changes to the achievable mean over time.
Measurement will reflect some form of reporting cycle, typically, though not always, articulated in some sort of time based form.
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10. Key Performance Indicators
Data collection and integrated coherent and coherent analysis tools
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11. Key Performance Indicators
Principles of Measurement
Process
Inputs
Outputs
Data collection for KPI’s occurs at the process level
KPI data should support the identification of changes in the maturity state of goods or services being developed or delivered in the process under review when using the resources allocated to it.
Changes in maturity are the measurable transaction points at which data can be collected.
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12. Key Performance Indicators
Principles of Measurement
Process
Inputs
Outputs
Input change state at the point of entry into a process
Output change state at the point of exit from a process
Measurable transaction points
Internal changes brought about by work carried out in process related procedures and tasks
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13. Key Performance Indicators
Principles of Measurement
Time
Qualitative or Quantitative Scale
Triggers best practise investigation
Best behaviour
Achievable mean
Process optimisation
Worst behaviour
Triggers worst practise investigation
Moving Range Performance Measurement
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14. Key Performance Indicators
Principles of Measurement
1 sd
2 sd
3 sd
SD = Standard Deviation
-ve
+ve
Achievable mean
Qualitative
Quantitative
Extreme
Success
Extreme
Failure
Distribution Performance Measurement
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15. Key Performance Indicators
Principles of Measurement
Rolling averages..
A kpi date set, with a reporting cycle, will generate a continuous data set over time
If the cycle can be identified, then over time, to resolve issues associated with “spikes”, it is necessary to average out observation results so that the overall trend can be observed
Divide the reporting cycle into segments of equal duration in the cycle
For each segment, calculate the average
Plot the average of each segment to identify trends
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16. Key Performance Indicators
Principles of Measurement
Rolling Averages Example
Reporting Cycle = one year. J F M A S O N D 12 36 45 23 11 88
Score for each month
Current Achievable mean = 22
Rolling average cycle = 3 months
First rolling average calculation takes place in March
And consists of the average of the count for January, February and March (( )/3) = 20
Carry out similar calculations for each cycle segment J F M A S O N D 12 36 48 23 11 88 16 32 27 15 19 45 41
Quarterly rolling average
Possible achievable mean is the average of the rolling averages which is 28.2
The achievable performance target therefore can be raised based on objective evidence
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17. Key Performance Indicators
Principles of Measurement J F M A S O N D 12 36 48 23 11 88 16 32 27 15 19 45 41
Quarterly rolling average
Attach “Red”, “Amber”, “Green” tolerances to rolling averages to give flag state indicators. The aim is to detect variance in average values.
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18. Key Performance Indicators
Principles of Measurement
Time
Qualitative or Quantitative Scale
Triggers best practise investigation
Best behaviour
Achievable mean
Moving Av
Process optimisation
Worst behaviour
Triggers worst practise investigation
Moving Range Performance Measurement
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19. Key Performance Indicators
Principles of Measurement
Plotting the rolling average should indicate the general trend of performance measurements towards process optimisation.
The advantage this brings is that while spikes in performance must be indicated and investigated, it is likely that they are the result of short term issues the reasons for which must be resolved. However, they should not affect the overall progress toward process optimisation. The primary purpose of calculating the rolling average is to confirm that the aims of issues resolution, process optimisation, are being met.
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20. Key Performance Indicators
Dashboard based information delivery
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21. Key Performance Indicators
Board
Senior Management
Middle Management
Shop Floor
Strategy
Action
The purpose of dashboards is to provide in context views of organisation performance
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22. Key Performance Indicators
Economic
(Accounting Measures)
Efficient
(Internal, best use of
Resources
“Assurance”)
Evolution
(Legislation,
Modification Programmes)
Effective
(are customer needs
being met.
“Quality”)
Identify performance related perspectives or views of organisation activity
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23. Key Performance Indicators
Principles of Measurement
Typically, groupings of indicators are described as “dashboards” or “balanced scorecards”. There are normally four perspectives, with quality assurance being deliberately broken out so that the concept of fitness for purpose can be addressed both internally and externally.
It should be noted that conceptually, there is no balance….. The purpose of a dashboard is to facilitate balanced and informed decision taking.
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24. Key Performance Indicators
No of widgets Produced
Qualitative and Quantitative pairs
No of widgets unfit for purpose
Specify KPI’s so that they support a single perspective
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25. Key Performance Indicators
Cost of raw materials
No of widgets Produced
No of widgets unfit for purpose
Identify Cross Perspective Links (supportive or dependent)
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26. Key Performance Indicators
Board
Senior Management
Middle Management
Shop Floor
Strategy
Action
Identify top down composition of reporting needs which gives the means to identify the level of detail required at each organisational level
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27. Key Performance Indicators
No of widgets Produced
No of widgets unfit for purpose
For each indicator provide drill down into single kpi dashboards
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28. Key Performance Indicators
Single KPI Dashboard
Qualitative
Quantitative
Achievable mean
Achievable
Best
Worst
Time
Qualitative or Quantitative Scale
For each indicator provide additional documentary evidence J F M A S O N D 12 36 48 23 11 88 16 32 27 15 19 45 41
Current achievable mean = 22
Achievable mean = 28
Flag state = RED
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29. Key Performance Indicators
To optimise the process, the achievable mean can be moved toward the upper tolerance limit and the lower tolerance can be raised too
Qualitative
Quantitative
Achievable mean
Time
Qualitative or Quantitative Scale
Best
Achievable
Worst
For each indicator provide additional documentary evidence J F M A S O N D 12 36 48 23 11 88 16 32 27 15 19 45 41
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30. Key Performance Indicators
For each indicator provide additional documentary evidence
A factor often overlooked in scorecard design is to support dashboards with additional documentary evidence. Provision of supporting evidence is essential to the coherent use of KPI’s. KPI’s are INDICATORS that prompt investigation and must therefore be supported by additional evidence where such evidence is can be acquired.
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31. Key Performance Indicators
For each indicator provide additional documentary evidence
It follows then, that performance dimensions, from an architectural perspective, are a sub set of the organisations IM dimension design. It is therefore good design to include performance perspectives in an IM dimension matrix which in turn forms part of the meta data descriptive attributes of documents and databases.
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32. Key Performance Indicators
Key performance indicators are the performance monitoring and reporting requirements of an information management framework.
KPI’s should be specified so that they identify where in the organisation data can be sourced, how data once collected is to be manipulated to produce information and how and with what frequency the resulting information is delivered.
KPI’s trigger investigation, but are not normally performance targets.
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33. About The Performance Organisers
This is one of a series of slide shows, the purpose of which is to explain some of the theory that should be understood in order to properly support business driven decision support on an enterprise wide architectural basis.
If you would like to know more about the slides and other services we offer, contact us using any of the means set out below:
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