K.P.I. - Key Performance Indicators are those elements of financial and numeric data that are used to monitor an organisations performance, indicating whether the organisation is on target to meet its goals and ambitions.
However, this financial and numeric data is just part of the story. As business management must focus on the integration and collaboration of people, systems, processes, and information across a business, including its business partners, customers and suppliers, in order to achive the goals and ambitions it has set itself.
ERP systems, provide the technology to produce summary sheets of KPIs or Dashboards. But this technology must be seen as the enabler and not the answer to business performance management. Implementing a KPI dashboard without regarding business strategy and the underlying performance management processes is doomed to failure. An appropriate organisational framework and ethos must exist to support the KPI dashboard.
The notion that critical metrics can be captured on a single (simplified) screen and all underperforming activity revealed in an instant is attractive. But the simple delivery often masks the major planning effort required to make a dashboard successful.
In the book Performance Dashboards by Wayne W Eckerson, he suggests a definition for dashboards as, Performance Dashboards let busy executives, managers and staff view the performance of key business metrics at a glance and then move through successive layers of actionable information in a carefully guided manner, so that they get the insight they need to solve problems quickly, efficiently and effectively. By helping business people keep a pulse on their business and chart progress towards meeting strategic and tactical objectives, performance dashboards are becoming powerful agents of organisational change.
Dashboard technology can be seen as a means of enabling management to communicate their goals and aims to all members of staff. Disseminating the strategy and the metrics that are being used to monitor delivery of goals and aims. As such, they bridge the gap between strategic objectives and operational behaviour and over time provide an effective means of aligning an organisation's resources with its strategy. To work effectively, dashboards must contain performance measures that are strictly aligned with strategy in order that there is not a disconnect between what is measured and what is achieved.
It is a mistake to believe KPI dashboards are easy to deliver. As the technical requirements necessary to deliver a successful KPI dashboard must; by their very nature; draw on numerous data sources. Each of these may require extensive definition, mapping and manipulation before they can be used in a repeatable and dependable manner, month after month. Similarly, it takes time to define business logic involving the treatment of data and the conditions giving rise to variances and anomalies.
A dashboard must be considered to be like the tip of an iceberg, with most of the data substance hidden out of view. Creating a KPI dashboard is strategically, operationally and technically challenging. To succeed, an implementation needs to be based on strategy and supported with good I.T. skills.