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.
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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.