Creating meaningful Key Performance Indicators in organisations can be extremely difficult. The problem is even more acute when it comes to KPIs in Service Level Agreements. We are helping our clients to manage and track performance against KPIs effectively. But sometimes the problem is more fundamental than just management – the question some organisations are asking is are they actually measuring the right things? Our SLA Toolkit is a rich source of KPIs for many individuals and organisations who are creating specific SLAs for the first time. But it acts as a guide only. The truth is that every organisation needs to think about their KPIs very deliberately and very clearly – so they are getting performance information on issues that really matter to them. More and more conversations we are having now go to the root of exactly what it is that organisations are measuring. I have decided to note down some of the insights I have gained from people who are expert in this area;
- Start by understanding the service it is you want to measure. Sometimes people seem to focus in on the metrics too quickly. Think about exactly what services you need to measure.
- Focus on Service Metrics – not just process Don’t become too focussed on the operational aspects of whether it is possible to measure the services you believe are being delivered. Lets take an example - A service might be – ensuring that customers can take money out of ATM machines. These types of ’service metrics’ can be difficult to measure. But if that is what you do actually want to measure then start from there and identify the limitation around measurement as a next step. Dont jump straight to something you can measure just for the sake of it.#
- Dont just pick KPIs that you know you can measure. Some industries like IT and Telecoms have hundreds of operational KPIs which can be easily measured by extracting them from IT systems. Just because you can measure them doesnt mean you should (Service Providers: Just because they are important to your ability to deliver the service does not mean they are important to the client’s management of your service)
- Operational KPIs and Service KPIs are not the same thing. Remember that there are always hundreds and hundres of operational metrics. These are usually process metrics – so you can gauge how effective your processes are operating. If you are a client organisation then you dont really need visibility of each of these – you should be able to capture a metric which helps you understand the quality of the output.
- Engage with your Service Providers to brainstorm how best to use a metric to capture the service quality. In some cases you will need to compromise – be clear about the limitation of the metric or composite metrics you are using. Clearly identify and manage the risks associated with the compromise.
- Start measuring as quickly as possible – and start reviewing as quickly as possible. Give yourself a defined period of time to agree the metrics and then just start measuring. But work with your service providers to review the metrics on an ongoing basis – tweaking or changing them based on your experience. If you wait for the perfect KPI you will never measure anything.
- Measuring will of itself deliver significant value. Many organisations simply do not measure KPIs due to the challenges involved. In my view the process of measuring and the culture it creates will immediately start to deliver increased value in your sourcing relationships. Most service providers would prefer to be measured – it allows them to demonstrate the value they are adding. They will actively support programs to improve and change KPIs where necessary.
- Don’t have blanket rules about how often KPIs need to be reported on. Remember that some metrics only need to be measured quarterly or annually – not because they are unimportant – but because the information is only meaningful on a quarterly or annual basis.
We continue to support organisations to manage Service Level Agreements clearly and transparently through ServiceFrame. We offer the flexibility to include whatever KPIs you want to measure. The challenge of selecting the correct KPIs remains at forefront of all our minds. Over the next few days I plan to do a bit of research and share with you the key warning signs that you are measuring the wrong KPIs!
