Tuesday, November 13, 2012

KPI, metric, measure: Huh?

KPI, metric, measure: Huh?

I recently read an interesting discussion on LinkedIn asking "What is the difference between KPI, metric, and measure?"  When I was first notified about the discussion, I thought "That's easy to answer."

Then I started reading all the answers; some thoughtful, some insightful, some trite, some silly, ... you get the idea.  But it did point out that terms we in the IT world use frequently may not be universally defined.

So, here are my definitions, take 'em or leave 'em.


A Key Performance Indicator (KPI) is the use of a metric that the business has defined to provide management with a quick analysis of how the business is doing in the area being measured that is considered critical.

Notice how I used metric and measure in that definition?


A Metric is a relationship of a measure to something that will indicate some degree of good or bad, success or failure, improvement or degradation such as time, distance, repetitions, events, etc..  For example, miles per hour, gallons per minute, kilowatts per hour; each of these can be given some rating or ranking in a hierarchy.

100 miles per hour might be an "Unsafely Fast" metric on a two-lane road, but be "Very Slow" on a NASCAR race track.

Notice how metrics are made up from measures?


A measure is fixed indicator of something that can be quantified such as count, size, quantity, dimension.  Examples are 2 apples, 15 inches, 8 ounces, 10 acres.

Notice that measures are at the bottom of this hierarchy.  Measures are used to define metrics which are used to define Performance Indicators which may become Key Performance Indicators.

Notice that I snuck in a level between metric and KPI?  There can be many performance indicators, but there should be few Key Performace Indicators.

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