Anatomy of a KPI.

From raw number to clarity.

The use of KPIs (Key Performance Indicators) is an integral part of business intelligence. The careful definition and use of a KPI, enable a business or department to monitor its progress against these goals.

Let's use a simple scenario to take a raw number and turn it into a KPI that is concise, clear and has meaning.

Consider the finance department within a company. One of the key objectives is to reduce the amount of accounts receivables over 60 days to increase cash flow and reduce risk. Furthermore, the objective is refined to "Reduce outstanding receivables over 60 days to less than $30K" and they wish to compare the current metric to the historical average to indicate movement; trending up, down or unchanged.

 
klipfolio - kpi diagram

The raw number. Care is taken to create a value that is current, but calculated over an appropriate time range, so as not to be too volatile.

klipfolio - kpi diagram

Add appropriate decimal places
Add suffix and prefix decoration if applicable

klipfolio - kpi anatomy

Add acceptable range context
Traffic lights for example (shape and colour differentiate)klipfolio - kpi traffic lights

klipfolio - kpi anatomy

Add trend context based on historical values and average
or benchmark data klipfolio - kpi indicators

 

We now have a KPI that is not simply a number; we've added meaning and insight without adding complexity.

klipfolio - kpi tools

Where the KPI is meant for at-a-glance awareness, tooltips and hover-over states can provide additional context to the metric as seen here. klipfolio - kpi dots

This example highlights the key characteristics of a KPI: it is relevant and associated with a high-level goal for the company; it can be measured as a numeric value, one that provides context, from an operational system. It is tied to a group/departments activity; they are accountable to take action to keep the KPI within the identified thresholds.

Alternative visualizations

klipfolio - kpi giph

A gauge or bullet-chart can provide all of the contextual details. The colour bands display the acceptable range; the marker the historical value for trending purposes, and the bullet (line), the current value (which equates to $24.7K)

klipfolio - kpi anatomy giph

Likewise, where there is value visualizing the fuctuations, a sparkline can be used as well. Here we use a reference-band to identify the acceptable range.

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