How KPIs drive performance in business intelligence
It’s no secret that business intelligence (BI) is one of the most important aspects of any modern organization. When data is used effectively and efficiently, analysts can gain valuable insight into their organization’s performance daily.
This article will explore how Key Performance Indicators (KPIs) drive performance in BI—and how to build an effective KPI process to ensure your organization is getting the most out of its data.
KPIs: A definition and a purpose
Key Performance Indicators (or KPIs) are a crucial part of the business intelligence process because they help measure and analyze an organization’s data and information usage.
They provide insight into business trends and opportunity areas while also providing management with a clear understanding of what is going right or needs improvement.
When used effectively, KPIs can help spot and correct problem areas and emphasize prosperous areas of the business. Let’s take a closer look at what KPIs mean and how organizations can use them to drive performance.
What are key performance indicators?
In its most basic form, a KPI is simply an indicator of someone or something’s success or failure in meeting their goals.
The critical part of the phrase key performance indicators is that it is crucial that these indicators be specific and that they measure actual performance.
KPIs can range in granularity from something as specific as a single transaction all the way to being able to measure an entire business or industry.
Using KPIs as a performance measurement tool
The true power of KPIs is in their ability to give management the quantitative data it needs to make effective, data-driven decisions.
In addition, because KPIs are designed to help track an organization’s progress towards its goals, they can serve as a much-needed motivator for employees. For companies that utilize BI tools like Domo, KPIs are absolutely essential.
Types of KPIs (and why they matter)
KPIs, like most aspects of business intelligence practices, are not cut-and-dry; instead there are a variety of different types which serve a range of purposes:
These provide reports on how data is being used and collected. They include areas such as error rates, application usage, and user activity timeframes.
Reporting KPIs help teams to understand the health of an organization’s BI reporting tools and processes. With this knowledge comes the opportunity to determine what needs improvement and strengthen business intelligence practices.
These KPIs provide a benchmark to compare with other companies in an industry and track against internal goals and objectives.
Scorecards help to establish a benchmark for performance which can be used as part of a company’s business intelligence planning process. In addition, scorecards allow organizations to see where they stand compared to other industry players, which helps to enhance performance exponentially.
These help to provide high-level insight into what is going well or not so well and provide guidance for future actions.
Strategic KPIs are integral in the overall business intelligence process because they present an opportunity for organizations to figure out what areas they should focus more on and what areas can be improved upon.
Creating and using KPIs: A step-by-step guide
Now that we’ve gone over some of the most common types of KPIs, we can dive into how organizations actually go about using them to drive performance with their business intelligence practices.
Step 1: Identify KPIs
As stated above, a variety of KPIs can be implemented in an organization. It is important to figure out which ones are appropriate for your company’s needs.
If you have reports, scorecards, or business intelligence systems already in place, look at these first to see how they align with your chosen KPIs. Select the KPIs that you feel best suit your company and would benefit other aspects of your business intelligence process.
Step 2: Set realistic targets
For a KPI to work, one needs to be able to use it as a basis of comparison for business intelligence planning and insight. If you’re not sure what your targets or goals should be, assess your current performance and compare it to industry competitors.
This step is where many organizations struggle with using KPIs as a basis. It is essential to remember that KPIs should be used as part of an overall business intelligence strategy and not stand alone.
When the right KPIs are implemented, the process of driving performance with BI is a practical and insightful way to see where your organization needs improvement and emphasis on success.
Step 3: Monitor KPIs effectively
Once you know what your KPIs are and how they align with your business intelligence practices, it’s time to start using them to drive performance. To do so, you need to be able to monitor them effectively.
This process might take some time, especially at first. To get the most out of your business intelligence practices, assess performance regularly and work on areas that need improvement until they are up to par with where they need to be.
It is helpful for organizations to come up with a plan for how they will use KPIs to support their business intelligence practices. This should include what processes they need to put into place and how often they need to be monitored and improved upon.
Step 4: Consider using dashboards
A final step in using KPIs to drive performance is to create dashboards with all of your business intelligence information accessible in one place.
Dashboards in Domo can provide real-time information about an organization’s goals and performance goals. They can offer insight into where KPIs are trending and highlight potential problem areas. Alerting in Domo makes it easier to get notified when certain thresholds are met with your KPI tracking.
BI Dashboards can offer businesses many benefits, from increased revenue to more effective organizational processes.
For these KPIs to be effective in the business intelligence process, they need to be transparent throughout an organization and used as a basis of performance improvement rather than a sole source for determining what needs fixing.
Step 5: Take action
When organizations take action based on what they’ve learned from their KPIs, this is the point where positive results can be seen. If there are opportunities for performance improvements, use available resources to develop new strategies and business intelligence practices.
When companies build and implement business intelligence tools and processes, they are able to drive more effective performance. This allows them to make a greater impact on a global scale.
When KPIs are used correctly in the business intelligence process, they can help organizations drive performance and make a more significant impact. Harnessing the power of data to drive better decisions is how businesses remain competitive and thrive.
By implementing KPIs as part of a unified, comprehensive business intelligence process, organizations can see their actions’ impact on performance and make strategic changes to improve success.
Knowing where your organization stands should be a priority for any business, and KPIs are a great way to accomplish this goal.