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key performance indicator (KPI)

A key performance indicator (KPI) is a business metric used to evaluate factors that are crucial to the success of an organization.

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A key performance indicator (KPI) is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates.

KPIs are applied in business intelligence (BI) to gauge business trends and advise tactical courses of action. Before KPIs can be identified, the following requirements must be met:

  • A predefined organizational process.
  • Clear business objectives for the process.
  • Quantitative and qualitative measurements.
  • An active approach to finding and remedying enterprise variances.

KPIs are above all else, a set of indicators to measure data against, a sort-of enterprise success gauge. Ultimately, they help an organization assess progress toward declared goals.

Indicators include quantitative metrics such as process tracking and progress measurement.

This was first published in October 2006

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