Wednesday, December 10, 2008

What's the problem of KPI.

In practice, organizations and businesses looking for Key Performance Indicators discover that it is too expensive, difficult or impossible (eg staff morale may be impossible to qualify with a number) to measure the performance indicators exactly required to a particular business or process objective. Often a business metrics with history that is similar is used to measure that KPI. In practice this tends to work but the analyst must be aware of the limitation of what is being measured which is often a rough guide rather than an exact measurement.

Another serious issue in practice is that once a KPI is created, it becomes difficult to change them as yearly comparisons can be lost.

Furthermore you should be aware that if it is too inhouse, it may be extremely difficult for an organization to use its KPIs to get comparisons with other similar organizations

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