Do you think a company is inefficient if they have more than 20 KPIs?

Information Management Online, January 3, 2008

Question: Do you think a company is inefficient if they have more than 20 key performance indicators (KPIs)? Is there an optimal number?

Joe Oates’s Answer: A well-designed set of KPIs is hierarchical. By this I mean that the top level KPIs are derived from lower level KPIs. To put it another way, in order to have a set of KPIs that are truly meaningful and helpful to C-Level management, meaningful and helpful KPIs for the management of each business process area should be developed. It is seldom possible to develop top-level KPIs without taking into account how to measure the major business processes of an organization.

So, in my opinion, 20 or more KPIs are not inefficient as such. As a matter of fact, in a well-designed KPI hierarchy, there are usually more than 20 KPIs. The key is in organizing the KPIs in such a way that lower-level KPIs can be combined into high-level KPIs and that the KPIs at any level in the hierarchy are appropriate for the intended management level.

Joe Oates is an internationally known speaker, author and consultant on data warehousing. Oates has more than 30 years of experience in the successful management and technical development of business, real-time and data warehouse applications for industry and government clients. He has designed or helped design and implement more than 30 successful data warehouse projects.

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