As we were designing the BPM for a client, the customer came out with the list of well thought out KPIs like:
- %age growth of average sales velocity over last quarter
- Average sales productivity for product-X over last 6 months etc...
We asked the customer to add one more specific to these KPIs. That is KPI class. You can have million KPIs from a given KPI class. For example, sales Velocity (the speed at which one converts a lead into a sale) is a KPI class. One can have following KPIs under this KPI-Class:
- Average sales velocity for a given product over past one year
- %age growth in the average sales velocity over last quarter.
Therefore, typically, when you gather the specifications around a KPI, one should focus on KPI-class instead of the exact KPI, which you want to track. The reason is that the specific KPI could change with time. As you design your performance management systems around a KPI-class, the data Extraction, transformation and loading and other foundation elements, will be more sustainable. For example out of the sales velocity KPI-class, one needs to design your infrastructure in such a way that you can get the value of that KPI by different cuts (location, products, sales channel) as well a s operations (like average sales velocity, %age growth in sales velocity, standard deviation in sales velocity, time trending analysis etc..). Here is the flow that BiPMinstitute would recommend:
Step 1- To begin with one may not need to bog the client down on KPI-classes. Let the client do his own thinking on KPIs he want to manage, and create the KPI business requirement accordingly.
Step II- Once the thinking has been done (hopefully driven by the strategic business plan), one can analyze on which KPI-class a given KPI belongs to. For example, if the client is asking for the KPI "Average sales productivity for product-X over last 6 months", one can assign it to sales productivity by value KPI-Class
.
Step III- Discuss the KPI-class with the client and check his comfort. Once client confirms the KPI class- expand the definition of the KPI class. This is important. In step I, the client identified a specific KPI and now the client is thinking in terms of the KPI class. The thinking will lead to the similar questions asked for a given KPI, but will be more holistic. Some of the holistic questions will be:
- What are the different cuts I can make of the KPI class? For example, you can have 'sales productivity by volume' KPI class on the following cuts:
- Product
- Location
- Sales Channel
- Sales unit
- Sales lead category
What are the various operations that I can do around this KPI class? The examples are:
- Average
- standard Deviation
- Time trending
Step IV- Design your infrastructure on the basis of the KPI-class. You will do the following activities:
Get the data on all the dimensions related to that KPI-Class. For example, when you get the data on a given sales transaction, you will not only get the velocity related data, but also the information on various dimensions linked to that sale like -
- Which product the sale was for?
- What was the location of that sale?
- What was the value of the sales?
- What was the volume of the sale etc...?
The idea is that one should design for the holistic analysis around the KPI class. If you don't take this approach, you will have a risk of too frequent changes in your BPM configuration and business intelligence modeling.
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