Conversations from the Mirror42 Team

How to define KPIs?

by Erik Hoffmann on May 31st, 2006

One of the approaches that the authors of the new ITSMF book ‘Metrics for IT Service Management’ took is to look for relationships between processes and define Key Performance Indicators (KPIs) in light of these relationships. For example, change management i.e. making sure changes are applied in the IT infrastructure efficiently and effectively, has direct relationships with helpdesk & incident management. If a change is not performed correctly, this will be immediately noticed by the helpdesk when customers are complaining of lack of service. Therefore, one of the KPIs of change management should be reflecting the quality of change management “delivered to” helpdesk & incident management, for example ‘% of incidents caused by changes’. This methodology can also be applied in defining KPIs in the other fields such as Customer Relationship Management (CRM). In CRM, for example, the pipeline of new sales leads has a direct relationship with the number of future new orders; the one cannot exist without the other, as high quality incident management cannot do without effective change management.

Next to this holistic approach, Mirror42 also looks at KPIs at a meta-level. Whether an incident, task, project, sales lead or order, they all go through the same motion (or flow) of begin and end. In this flow these items go through e.g. a range of statuses (open, in progress, close, etc.) with a changing expected close date, and associated costs or revenue. This similarity in flow implies immediately that similar KPIs can be defined irregardless of the item being an incident, task, project, sales lead or order. For example, each of these items will have a KPI such as ‘% of items violating expected close date’, or ‘# of new items this month’ . This meta approach ensures that KPIs can easily be defined for these types of items with a “flow” based on a standardized meta set of KPIs. Obviously, this approach delivers a sub-set of KPIs; for most item types there is another, smaller, set of (business or field) specific KPIs.

The value of the combination of these two approaches is of course a more efficient, accurate, and standardized process of KPI definition.

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