KPI design

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Data Visualization and Performance Analytics– WEEK 3 / MODULE 3

Week 03 - Agenda

• Discussion Review • Designing KPIs and Dashboard Displays • Metrics and Indicators • Leading and Lagging • Attributes of KPIs • Designing KPIs Note: Visual design in Module 4

MODULE 3 – DESIGNING KEY PERFORMANCE INDICATORS AND DASHBOARD DISPLAYS DSS 670 – Data Visualization and Performance Analytics

• Explain the difference between metrics and indicators, drivers and outcomes, and leading and lagging indicators.

• Describe the six attributes of a good performance indicator.

• Describe the 12 characteristics of effective performance metrics and the five types of targets.

• Implement the nine steps of Key Performance Indicator development.

• Explain the importance of design to the success of a performance dashboard project.

Module Objectives

What gets measured gets done.

Metrics and Indicators (2 of 2)

Metrics

• Measure of business activity

Performance Indicator

• Measure in the context of a goal

Drivers and Outcomes (2 of 2)

Value Drivers (Leading Indicators)

Outcomes (Lagging Indicators)

Number of Face-to- Face Client Contacts

Completed Sales Revenue

Brainstorming Activities and Behaviors that Correlate with Drivers

Why? Why? Why? Why? Why?

Sensory Perceptions: What will is [look, feel, sound] like?

Brainstorm – Drivers and Outcomes

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Other Metrics Activity Metrics: Measure business activity related to

performance indicators but don’t have goals associated with them.

Risk Indicators: Measure the riskiness of a business activity or how it might adversely affect operations.

Key Performance Indicators: A nonfinancial metric that is measured frequently and affects most of the company’s critical success factors and performance metrics.

Attributes of Performance Indicators

Value

Time Frame

Benchmark

Target

Ranges

Visual Encodings

Five Types of Targets

v Achievement v Reduction v Zero v Absolute v Min/Max

Achievement Targets • Performance should reach or exceed the target in an upward direction

• Exceeding is desired but not required

Reduction Targets • Performance should reach or exceed the target in an downward direction

• Anything less is desired but not required

Zero Targets • There is no circumstance in which a positive number is a good thing.

Absolute Targets • Come as close as possible to the goal without exceeding in either direction

Min/Max Targets • Performance within a range of values

Effective Performance Metrics

ActionableStrategic

Simple Timely

ReferenceableOwned

AlignedAccurate

Correlated Standardized

RelevantGame-Proof

Designing KPIs 1. Framing statement 2. Elaborate with business questions 3. Define metrics for questions 4. Define targets for metrics 5. Diagram drill paths 6. Define behaviors metrics should drive 7. Check availability and condition of data 8. Check for compliance and balance 9. Assign owner for each metric

Framing Statement (Example) The performance dashboard for WeRWidgets will facilitate the following objective:

• Improve customer satisfaction by providing best-in-class performance in the following key areas: • Mean Time to Repair • 1st Repair Resolution (Defect ratio of repaired widgets)

Business Questions Brainstorm business questions related to our framing statement:

Improve customer satisfaction by providing best-in-class performance in the following key areas:

• Mean Time to Repair • 1st Repair Resolution (Defect ratio of repaired widgets)

Business Questions (Example) Potential questions: • What is our current mean time to repair a widget? • How has it changed over time? • What does our customer expect? • How do we compare to customer expectations and/or best-in-class? • What is considered best-in-class MTTR? • What percentage of repairs are returned for additional repair? • How does it compare to best-in-class? • Others?

Define the metric and details (example) Mean time to repair

Elapsed time in days starting with date and time widget is received in shipping to date and time widget is shipped after repair.

Measure MTTR

Dimension 1 Timeframe: since Jan 1, by month

Dimension 2 Widget type (or manufacturing line, product sku, etc.)

Benchmarks / Comparison

Industry average is 5.3 days, best-in-class is 2.7 days ; Our performance over past three years between 5.0 and 9.2 days.

Targets/Goals 90% of widgets MTTR 3.0 days by month by year end 3.5 days three month moving average by year end

Drill paths Overall average >> quarter >> month by widget type

Indicator type Leading/Lagging (Driver/Outcome)

Notes

Name: REPLACEwithNAMEDSS 670 KPI Development Exercise

Objective Statement: REPLACE

Framing Statement: REPLACE

Business Questions that result from the framing statement. List several.

List potential metrics/measures to answer business questions (ID at least one leading and one lagging indicator) •

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Metric 1: REPLACE (make additional copies of slide as needed) Definition: REPLACE WITH DEFINITION

Dimension 1

Dimension 2

Benchmarks / Comparison Targets/Goals

Drill paths

Lead/Lag

Driver/Outcome

Expected behaviors Notes

Comment on this chart in the text chat

Source: http://www.dashboardinsight.com/dashboards/screenshots/corda-centerview-dashboard.aspx

Actions for Week 3 qWexler, Shaffer, and Cotgreave - Big Book of Dashboards. (chapter 8) Multiple Key Performance Metrics.

Review Eckerson, Wayne W. Performance Dashboards:

Measuring, Monitoring, and Managing Your Business. (Ch.10, 11)

qEngage in discussion groups for Module 3/Assignment 3.

qIn Qlik the following sections should be completed this week. 1) Understanding Dimensions and Measures

2) Create Master Items

3) Select Data, Using Search Tools (**Create and Apply Bookmark <- optional).