AUG 23, 2012 6:20pm ET

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Are You Working With Stupid KPIs?

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In my last rant, on business analytics and the pathetic state of dashboards, I pointed out significant flaws in business intelligence software created by technology providers and in how it is being deployed by business and IT. Now I want to follow up with some insight on disconnects to a critical asset that is essential to the success of business analytics. I mean key performance indicators (KPIs), a term used in inaccurate ways that have diminished the value of the concept for business.

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Comments (3)
I believe your observations are accurate insofar as they describe certain facets of a larger problem. In my most recent post on data-to-decisions.com, I stated the following with regard to data collection, organization, and analysis: "In the past, the technical challenges of collecting and organizing data for analysis have been immense. These challenges have spurred the growth of a large segment of the software industry along with a legion of consultants to support that software. For this reason, the importance of data warehousing technologies, data integration software, and data storage has received a great deal more attention than the fact-based decision making process as whole. The importance of data cannot be understated. However, data collection and organization must be viewed within the overall context of their role in fact-based decision making process."

KPIs (or KIs) are related to this problem. Too much focus on data and analysis outside the context of fact-based decision making as an organic process has lead to the situation you describe. No matter what type or level of decision, if the hard work of defining objectives, goals, and alternatives has not been completed then any measure of progress will work just fine.

Posted by Ken M | Friday, August 24 2012 at 1:37PM ET
Agree with Ken M completely. Transaction systems fill up BI databases and data warehouses. BI Data provides potential (stress is on the word potential) information. Potential Information, past experience and playing successful hunches provide wisdom. Wisdom is the basis for forward actions. Managing to the measure is trusting your altimeter's constant 5000 feet reading as you see the ground approaching out the windshield! Common sense and business savvy usually go beyond the dashboards... And past experience is one of the ways to part the waves. The use of limited measures in vast decision spaces results in the same fallacy of sweeping statistical conclusions from small samples.
Posted by Prakash R | Monday, August 27 2012 at 12:47PM ET
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