In addition to hot coffee, regardless of the season, one of the newer steps in my morning routine is checking my Apple watch. I get an alert within a few minutes of waking up that shows me how I slept and encourages me to close my rings for the day. Throughout the day I can easily check on my progress. I know when I need to stand up, or get in a few extra minutes of exercise. For your organization, Analytics KPIs can be your quick way of checking how you are progressing compared to your goals.
What are analytics KPIs and why are they important?
Analytics KPIs, or Key Performance Indicators, are objective factors established to measure your company’s success toward key goals or initiatives. They are quantifiable targets that can be tracked over time and provide a quick insight into your performance.
With the trend toward visualizing more data and company performance in easy to digest dashboards, they have become increasingly popular in organizations. It is important to ensure you establish analytics KPIs that effectively track your goals.
How can they impact your organization?
Ability to quickly understand the current state – KPIs allow you to objectively understand the current state of your organization. Although each number has data and context behind it, having established KPIs will allow you to quickly identify areas of concern on a scorecard or report and drill into the data.
Ability to measure impact of strategic initiatives – With baselines established, you can more easily track the impact that changes have on your organization. If a new process is defined or a system implemented, you will have quantifiable data to prove the business value.
Ability to measure progress and trends – Starting to collect this data will allow you to measure performance over time and identify trends to inform future strategic roadmaps.
Where do I start?
Understand Your Goals – First, you need to understand your business goals. These will vary by industry and company and need to be specific to your product. For a healthcare company, your goals may balance increasing patient safety and customer service while reducing costs, whereas a financial services company would want to increase revenue and profit margin.
Determine How to Objectively Measure Them – For your goals, identify quantifiable ways to track them, defining numbers that can be used. For example, in software development, this might be the number and severity of defects. There may not always be a 1-to-1 mapping between a goal and a KPI, but you want to ensure for each goal you have at least one way to associate a metric to it.
Identify Source of Truth and Methodology – Once the analytics KPIs have been determined, you will need to identify where each number should be sourced from and establish a clear definition. Often companies have multiple systems of record, for example a company may have an Enterprise Resource Planning (ERP) and Accounting Software. It is important to work with stakeholders to understand which serves as the system of record for each KPI because they will likely have similar fields available. Going through this process will help to ensure accuracy and begin to gain buy-in from resources.
Adjust Data Collection or Processes – It may sometimes be necessary to adjust processes to better capture data for KPIs. For a software company, defects are typically a solid measure of code quality. However, this is dependent on details on defects accurately being captured. Although a count of defects provides some insight into overall performance, capturing details like severity, assignment, associated testing phase and user story allows for more insight. To ensure consistency across teams also might require establishing and enforcing processes for when defects should be opened and how fields should be set.
Iterate Over Time – Once KPIs are being tracked and shared regularly, you will need to routinely assess and adjust them over time. Due to the increased visibility of these measures, it is likely individuals will change behavior. It is important though to ensure these changes have the intended impact and, if not, review and modify the KPIs over time.
Defining Analytics KPIs is a process that will transform your organization, allowing you to move from the qualitative “things are going well or not” to a quantitative “here is the return on investment for this given initiative.” It will help you to decide where to invest time and resources to further your goals. Interested in getting started? Reach out below to connect with a consultant.