on target
How often shall I update my KPIs?
Shall you measure your KPIs weekly or monthly? Or possibly daily? And sales evolution? And user satisfaction? Maybe quarterly?
Strategic information update of one of the common dilemma of any decision support system and is usually the subject of lengthy discussions. This decision is still more sensible when you combine measures with different frequencies in a single dashboard.
Here are some practical considerations and an innovative suggestion to make your dashboard more dynamic by increasing low update frequencies.
So, back to our question, which is ideal update frequency? Here is, in a picture, my point of view:
Let's first consider more than once a day, this means interval between measurements less than 24 hours. From a strategic point of view such frequency is absolutely useless. If anybody can give me an example of a strategic decision that need such update frequency, please make a comment to this post: during my 30+ years experience I haven't found any.
The only possible exception to this rule could by if your company operates in security market (or other dynamic exchange like commodities). But if this is your business, your operational application shall already provide the information to support your decision.
So why the new trend of “real time business intelligence”? Frankly I think this is just a new marketing buzzword. Apart from the fact that the term “real time” (usually sub-millisecond) seems a joke for a business application, it would be hard to find an application for real time BI.
Things are different if you use some BI tools to produce operational information, in such case instant update has sense, but you are not making BI: you are using a BI tool in an operational application.
So daily update is great, weekly update is also excellent and monthly update is still acceptable for strategic information depending on specific measure you are tracking. Choose the frequency that best fits your control needs. If you have weekly reviews choose a weekly frequency.
Update cost basically depends on data collection, if automated (like web analytics) daily frequency is usually best choice. What I suggest is that in your dashboard (if any) you keep your sparklines aligned to indicate different update frequencies, like the example below:
And what about lower frequency, like quarterly update? I really suggest to avoid it for three reasons:
It doesn't produce enough observations. For example, on an 8 months period you can have only two measurements. How can you identify trends?
It takes too much time to flag deviations. If things go wrong you will know it, on average, 1-½ months later.
It takes too much time to check if decisions are leading to expected results. Even after perceiving that things went wrong and taking action, you shall expect, on average, 3 months for feedback.
Now, if you classic KPI books or some KPI repository you will find a lot of KPIs whose frequency is quarterly. Here are two examples:
Quarterly sales growth
Employee satisfaction
The trick is to transform such measures in monthly measures. The quarterly sale growth can be quickly solved with a “rolling measure”. Simply compare at end of each month last three months with previous three months. On quarter boundaries you get quarterly sales growth and, in between you still get sales measures.
The case of employee satisfaction is more complex, by the way such kind survey of is usually performed once a year. Does it make sense wait 12 months to know if new human resource policies produced a good effect?
If your answer is “no” you can change survey frequency, for example employees will fill the survey at conclusion of their birthday month. This will produce monthly satisfaction measures. Each survey would obviously represent a sample but, if your company is large it will be statistically significant.
As 2009 is reaching its end you have possibly noticed less activity in my posts but I am preparing big news for coming year, including a free agile dashboard application that you can deploy with minimum effort and no IT expertise. In addition to usual RSS feeds, there is now a mailing list that you can subscribe to be informed about new posts.
I wish to all my blog readers a 2010 with 100% of your KPIs improving and great professional and personal realization!
Recent posts on KPIs
You can also be interested on those recent posts related to Key Performance Indicators:
And of course the popular post about KPIStudio: the simple, spreadsheet-based KPI design tool that I made freely available and that is attracting new users every day.
Are you a management consultant?
Would like to try or coach this technique with your clients, do you need any additional or technical detail? Please let me know! Component Bases Solutions has great interest in partnership with business consultants. We can help you automate your proposed solutions in a very short time. We can also help to increase your visibility through links from many management tools we make freely available on the Web. Please contact for more detail.
Did you like this post?
Please, spend a few seconds and click on button below to socially bookmark it or tweet it. It will help to promote this blog and improve its content, Thank you!
|
 |
 |
Posted at 11:19PM Dec 30, 2009 by admin in General | Comments[0]
