Written by Mg, PMP, ITIL Expert, Jan 11 2015
Critical Success Factors (CSFs), Key Performance Indicators (KPIs), and metrics… what does it all mean? So much has been written on this topic, but looking at best practice frameworks like ITIL or COBIT or ISO 20000, can leave you wanting more or cross-eyed, as the information found within these disciplines is limited and/or confusing.
I decided to write this article as a means to bring clarity to the subject. I’ve kept the examples simple in an effort to focus on making sure the concepts are well understood. I hope you find it helpful.
Here they are:
Critical Success Factor – What has to happen for the service or process to successfully meet strategic business objectives? A CSF is simply a succinct expression of the business objective to meet. For instance, if a strategic business objective is to ‘have a capable workforce,’ a CSF would be similar, ‘to have a capable workforce,’ or ‘to develop a capable workforce.’ There isn’t a lot of detail. Further detail is expressed in the KPIs and then, the specific measurements used to calculate the KPIs.
Key Performance Indicator – A KPI supports the CSF. It can be thought of similar to a gauge found on the dashboard of a car or plane — needles point to numbers that indicate performance. What do we need to achieve to successfully support strategic business objectives (expressed in the CSF)? In the above example, If the CSF is to have a capable workforce, a KPI for the Service Desk may be to ‘ensure 70% of staff have supportive technology certifications.’ There may be 3-5 KPIs to support a particular CSF, and how these are determined is specific to the service or process developing them.
Metric – “Something that is measured and reported to help manage a Process, IT Service or Activity.” (ITIL) Metrics are used in conjunction with KPIs to measure CSFs.
Measurement – “The size, length, or amount of something, as established by measuring.” (Webster’s Dictionary!) Using the same example given above, if the Service Desk is calculating a KPI to ‘ensure 70% of staff have supportive technology certifications,’ they may have two or three different measurements to calculate the KPI result. One measurement can be the current number of Service Desk staff. Another measurement can be a count of those staff who possess a technology certification that qualifies and can be counted toward meeting the KPI. It takes these two separate measurements to perform the calculation. And when capturing measurement information, it is important to document the source of the data, the owner of the data, how often the data is to be collected, reported, etc.
Difference between KPI and Metric – A metric is simply a number that has been calculated for your purpose. A KPI is a metric that is tracked over time and thereby, provides a point of reference and an ability to see trends to help you manage a CSF. And this is why all KPIs are metrics but not all metrics are KPIs.
Describe the three types of Metrics (per ITIL):
- Technology – These are often associated with component and application-based metrics such as performance, availability, etc.
- Process – These metrics can help determine the overall health of a process. KPIs can help answer key questions on quality, performance, value, and compliance in following the process.
- Service – These are the result of the end-to-end service. Technology metrics are normally used to help compute the service metrics. Customer Satisfaction is an example of a service metric.
Describe Thresholds (Target, Warning, Action) – Thresholds refer to the value of a metric. At the Target level, a KPI is successfully meeting business objectives (CSF). A Warning Threshold indicates a monitoring status — similar to a yellow traffic light, it represents ‘proceed with caution.’ This KPI, while it doesn’t require immediate action, has reached a level that requires close monitoring. And, finally, an Action Threshold indicates management action is necessary. The KPI is not achieving acceptable results and some management action is necessary if business objectives are to be successful (CSF).