Metrics and KPIs are essential to effectively measuring IT performance—if used correctly. The trouble, according to a recent CIO piece, is that this is not always the case. Read on for common KPI mistakes and what you should do to avoid them.
1. Not Considering the Source
A metric is only as good as its source. Before relying on a metric, companies should understand the source, who created it, and whether it’s based on a well-proven methodology. It’s also important to understand the metric’s purpose, as that can inform the extent to which it should be relied upon.
2. Failing to Collaborate with Front-Line Personnel
In most organizations, it’s ultimately the front-line business personnel using collected metrics to make decisions and drive actions. However, too many companies fail to engage with these stakeholders when devising the initial metrics. Before building any analytics, data leaders should collect the business requirements from all involved parties. This entails distilling metrics down to the most relevant data points for driving outcomes. While some companies may balk at the initial work, the time is rewarded with more tailored, effective analytics solutions.
3. Focusing on the Wrong Numbers
Another common KPI mistake is wasting time and money chasing the wrong numbers. Generally speaking, metrics that don’t support or reflect future decision options are unnecessary and pull focus from strategic areas. To avoid this trap, clearly identify all goals before deciding which metrics to study. From there, determine how individual metrics are connected to each other, and what is likely to happen during the various stages of the initiative that might affect these KPIs.
4. Trusting the Numbers Too Much
Chasing the wrong numbers is a mistake, but the correct numbers can cause challenges too. A company might identify a good metric to track, but there is always the possibility that the data could be flawed in some way. For example, perhaps the sample size is too small or there is an inconsistency in the time scale. For these and other reasons, it’s a good practice to have a healthy dose of skepticism and make sure you thoroughly investigate the underlying data before trusting in a metric.
Take a look at CIO for more on the above and other KPI blunders to avoid.