What does KPI mean? What is a KPI dashboard and how does it measure performance indicators?
- What is a KPI Dashboard for measuring key performance indicators?
- KPI definition – What are key performance indicators?
- Performance indicator examples – types of KPI
- How do you make informed decisions with KPI dashboards?
- Benefits of KPI dashboards
- How do KPI dashboards give employees more autonomy?
What is KPI Dashboard?
Key Performance Indicator (KPI) is a performance evaluation tool that illustrates the degree to which a desired parameter has been achieved.
The acronym KPI comes from the three English terms:
- K (Key) – competitive advantage related to strategic objectives, to the functioning of the business directly
- P (Performance) – performance directly, through clearly measured, quantified values, with predictable influencing causes
- I (Indicator) – comparability against various references, with orientation towards future changes and without explaining previous events
What is a KPI Dashboard for measuring key performance indicators?
Business managers often use business management software systems that include dashboards for monitoring performance indicators to get an overview of productivity in the company.
KPIs are a set of measurements that reflect performance in terms of progress towards achieving a business’s objectives. Through these measurements, the company’s leadership, management, and investors can evaluate the business’s performance in the medium and long term.
KPI definition – What are key performance indicators?
Key performance indicators (KPIs) are visual measures of performance. KPIs are those indicators that answer questions about the present and future of the company, such as: “Where are we?”, “Where do we want to get to?”, “How do we do this?”. Thus, only values that have the ability to impact cash flow or conversions have the greatest chance of being smart KPI performance indicators.
To understand what KPI means, you need to:
- understand your business and the goals you have set for yourself
- transform your business objectives into achievable goals, which involves an effective strategy
- select a performance indicator for each goal
Performance indicator examples – types of KPI
Modern business management systems allow the creation of personalized dashboards for each department, team, or employee in the company, so that everyone has access to the data that matters most. With the help of these systems, KPI tracking dashboards can be generated for the CEO of a business, as well as for production directors, project managers, sales or marketing teams, etc.
There are many types of key performance indicators. They can be qualitative, quantitative, predictive or historical. Furthermore, depending on the type of operations you want to track, indicators can be divided into:
- sales indicators
- economic - financial indicators
- accounting indicators
- human resources indicators
- logistics indicators
- production indicators
- marketing indicators
- project management indicators
- management indicators
How do you make informed decisions with KPI dashboards?
To track the profitability and future of your business, it is not enough to have access to various data sources, you must bring them together in a productive, easy-to-access and understandable way.
A modern KPI monitoring system:
- Supports the entire decision-making process and provides the full context and details that led to that point
- Easily gathers complete, accurate and up-to-date information
- Makes information available to the user in the form of clear, concise, easy-to-interpret graphics: dashboards
Benefits of KPI dashboards
- They are more than a reporting tool, being components of modern BI or CPM systems
- They can help you measure, monitor and manage business performance
- They provide and offer access to real-time information
- They support business managers to make informed and goal-oriented decisions, acting on real data and less on intuition
- They contribute to the instant observation of problems and their resolution
- They allow information processing and analysis from different perspectives
- They facilitate the comparison of different business hypotheses and the coherent simulation of future results, through what-if and what-for functionalities
How do KPI dashboards give employees more autonomy?
- Create various reports themselves with drag & drop, thanks to intuitive interfaces
- Customize the information displayed, applying various filters or by changing the type of graph
- Employees at different levels of the company can immediately switch from data tables to interactive data visualizations
- They can quickly identify underperforming activities and take the necessary corrective measures to improve certain indicators
- Get answers in just a few seconds
- The viewing mode can be changed quickly, depending on the needs of each user
- Can create certain standard reports at the company level, and each employee chooses if and how they want to display them in the dashboard
- Can create dashboards at the department level (CEO, production directors, project managers, sales or marketing team)