Metrics are at the core of business intelligence. They are arguably the most important aspect of a business intelligence project and probably the most difficult as well. A recent whitepaper from Booz & Co. observes that most companies have not put enough thought and rigor into establishing the metrics used to measure itself, sometimes measuring thousands of key performance indicators rather than a few metrics that really make a difference.
Metrics are at the core of business intelligence. They are arguably the most important aspect of a business intelligence project and probably the most difficult as well. A recent whitepaper from Booz & Co. observes that most companies have not put enough thought and rigor into establishing the metrics used to measure itself, sometimes measuring thousands of key performance indicators rather than a few metrics that really make a difference.
Establishing the right metrics requires a deep understanding of where a company is today and where it wants to be in the future and should be customized to fit the organization’s strategy and goals. From expert interviews, research and analysis, Booz & Co. established the following six criteria to use when selecting metrics and performance measurement criteria and implementing them in a business intelligence solution to ensure a best-in-class business intelligence implementation.
- Align With Strategy
Metrics must be customized to align with a company’s strategy and culture to measure its strategic goals. They should be clearly articulated and understood by everyone, have a strong supporting governance structure behind them, and have visible executive leadership commitment.
- Drive Value
Metrics should focus on core financial and operational targets that make a difference by driving value. They should include both leading and lagging indicators and be reinforced with consequences for not achieving acceptable results.
- Ensure Accountability
For a successful business intelligence program, there must be individual accountability and ownership for the organization’s performance against its goals. Accompanying the consequences for non-performance should be an incentive system that rewards ambitious goals.
- Can Be Easily Executed
Metrics should be supported by user-friendly interfaces, intuitive design, simple-to-use systems and processes that allow management to gain insight from the information. This includes providing information at the right time so that it can be acted upon.
- Maintain Quality and Consistency
A business intelligence solution’s metrics should represent the single version of the truth. Balance flexibility with standardization and provide consistency and transparency for maximum success.
- Manage Interdependencies
Create an ongoing process that evaluates the effectiveness of the metrics you use and gather feedback on how you might improve the initial metrics you establish. If you need to, take corrective action and adapt your metrics over time, especially as external developments occur that might affect how the metrics are applied.