Key Performance Indicators

The Challenge
Critical information is lost in the noise of financial, operational, organizational and customer data
Management focuses on issues-of-the-day rather than targeting a balanced, sustained set of metrics
Limited resources must be allocated across a mix of functions and groups
Being world class in a few areas wont overcome deficiencies in other critical success factors
Metrics subject to interpretation engender arguments and politics not action

Our Approach
Derive a limited set of Key Performance Indicators directly from the organizations strategic objectives
Implement a sustained, structured process to measure the KPIs and thereby drive improvement

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Implementing Key Performance Indicators

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_M acr os

KPIs are used to focus the organizations attention over a sustained period onto those
actions which best advance its strategic objectives
The KPI Implementation Process

Analyze
Business
Environment
Analyze key strategies
and objectives
Identify key clients and
value propositions
Identify major issues
Identify critical
processes and systems
Identify potential users
Evaluate current
metrics

Identify
Candidate
Measures
Identify measures that
are quantifiable,
readily gathered and
consistently available
Derive candidates in a
top down process
starting from the
organizations
strategies
Focus on leading
versus trailing
indicators

Select
KPI
Measures
As a set, address key
critical success factors
across all aspects of
the organization
Ensure KPIs are
measurable and stable
KISS dont overcomplicate
Verify relevance of the
selected set of
measures to driving
strategy

Implement
Measures
Assign responsibility
for production
Prototype to validate
measures
Implement systems
and/or procedures to
capture metrics
consistently
Develop dashboard
reports; consider drilldown capabilities
Build historical
information base and
reports

Embed in
Operations
Link with planning,
business review and
reporting processes
Set targets
Tie to individual
performance measures
Provide for appropriate
distribution
Incorporate into
discussions with front
office clients
Use as a basis for
further analysis

AAwell
welldesigned
designedKPI
KPIprogram
programdrives
drivesthe
theorganization
organizationtotobalance
balancelong
longand
andshort
short
term
objectives,
internal
and
external
measures,
and
management
focus
among
term objectives, internal and external measures, and management focus among
the
thevarious
variousprocesses
processesand
andcapabilities
capabilitiesneeded
neededtotoachieve
achievestrategic
strategicobjectives
objectives

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Potential KPI Metrics

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From the broad array of potential metrics, a limited number must be chosen that will
be effective in achieving targeted results (and are practical to implement)
Examples of Potential KPI Measures
Productivity

Project Management

Ratio of man-days for maintenance vs. new development

Number of new products supported during month
Average time to add support for new products put into production
Time to provide systems coverage of new products vs. benchmarks
Productivity per developer (various measures as appropriate)

Quality

Number of programs removed from production due to errors

Number of new trouble reports related to system errors
Number of open trouble reports related to system errors
Average time to resolve trouble reports

Operational Effectiveness

Percent of STP transactions

Percent of trades required to be processed off-system
Percent of entries amended or re-entered due to system error
Key system availability/up-time as a percent of scheduled
Estimated cost per key transaction
Estimated technology cost per transaction

Batch systems
Percent of processing jobs completing after target time
Completion time of key batch systems
On-line Systems
Average time between transaction entry and end-of-processing
Maximum time between transaction entry and end of processing

Number of projects started, completed, canceled, re-defined

Percent of man-days on tasks exceeding budget to total
Percent of projects completed, on schedule, over schedule
Percent of staff on projects completed, on schedule, over schedule
Percent of developer time charged to tracked projects
Percent of developers on projects that passed formal reviews
Number of projects in each project process phase
Percent of staff working on projects in each phase

Staffing

Ratio of front office to related technology staffing

Ratio of back office to related technology staffing
Overtime as a percent of total
Consultants as a percent of staff
Ratio of open requisitions to current staff
Number of voluntary terminations
Number of new hires
Percent of staff completed targeted training course(s)
Average time in current position
Hours of training time logged

Client survey ratings

Annualized expenditures vs. budget

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Selecting KPI Metrics

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To be effective, KPI measures must derived in a structured way from the underlying
strategies and objectives of the organization
Framework for Identifying KPI Measures

Strategy
Provide technical
platforms, counsel
and support at a
level of cost that
enable the front
office to be the
leader in the
markets it serves

Objectives
Provide flexible,
rapid support for
changing business
initiatives
Ensure consistent,
high levels of quality
Deliver services cost
effectively
Build a base of staff
competencies able to
address long-term
business needs

Critical
Success
Factors
Effective systems
development
processes
Appropriate
technical skill set
Close involvement in
business planning
Adequate knowledge
of business area
Flexible, extensible
architecture
Awareness of
external business and
technology trends

Implementing
Processes
Project
management
Business analysis
and requirements
specification
Systems design
Systems
development

KPI
Metrics
Schedule compliance
System feature
compliance
Budget compliance
Standards
compliance
Staff productivity
measures

Systems deployment
Project review,
prioritization and
approval processes

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