Business analysis glossary
KPI (Key Performance Indicator)
What it is
A KPI is a measure of how well an organisation or process is achieving an important goal. It has a clear definition, a formula, a data source, a target and an owner. Good KPIs are tied to objectives, use data that is reliable and are reviewed regularly, with the number of KPIs kept small.
Why it matters
KPIs focus attention on what matters. Without precise definitions, two people calculate the same KPI differently and meetings become arguments about the numbers. Analysts help to define them precisely, so there is only one version of the figure that everyone trusts, whether it appears in a report, a dashboard or a meeting.
Example
Cedar Credit Union defines the KPI "Average loan decision time": hours from complete application to decision, calculated from the loan system, target under 24 hours, owned by the head of lending. With a precise definition, a table in the dashboard and a monthly slide always show the same number, and any change in it has a clear meaning.