Thursday, February 12, 2009

How to distinguish between measures and KPIs…

As you all know, measures are identified at the analysis stage of Data Warehouse/BI project. Are all identified measures KPIs? This question came up, while we were having a discussion on one of our new projects. It was an interesting question, thought to make a post on it, showing what I think, what I have read… In a way, yes, we can consider all measures as KPIs. But they become proper KPIs when it shows the quality of the value, health of the value. This requires another attribute to be attached: Let’s take an example, Sales Amount, obviously it is a measure. It shows the sales amount for some dimensions (for current year, for a product). Does it show the health of that value, whether it is good or bad? No, it is just a value. Important thing to remember is, KPI is not just a value, it indicates the health of the value too. So, if we need to make Sales Amount as a KPI, we need to use another attribute such as Target. Target value allows to judge the Sales Amount whether it is healthier or not, hence Sales Amount becomes a KPI. That’s how I see the difference between a measure and a KPI? Am I right? Any thoughts on this?
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3 comments:

  1. UnknownFebruary 13, 2009 at 1:29 AM

    Yes, I guess I would agree with that. Its something similar to the concept of; "data, once given meaning becomes information". And also, I feel you could say all measures are candidates for KPIs (instead of we can consider all measures as KPIs), and they become KPIs once they are enabled to measure performance.

    Those're just my thoughts on this :)

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  2. Dinesh PriyankaraFebruary 13, 2009 at 10:22 PM

    Hey, thanks for the comment, yes, I agree, they are candidates for KPIs.

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  3. AnonymousMarch 7, 2009 at 12:10 PM

    Hey Bro, Google Reader and Mr. A. Prasanna's blog keep highlighting your space. In fact, Google Reader, zooms your space into my line of sight oh so frequently. I think these are signs that I should read your blog even though I'm not a BI or Microsoft expert.

    I agree, a KPI requires a target value. So, if you want to turn Sales Amount into a KPI, you'd have to specify a target sales amount. You can then compare actual sales amounts with this target value.

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