Metrics and key performance indicators (KPIs) in business analysis

Metrics and key performance indicators are used to assess the performance of solutions, solution components, and other elements that might be of interest to the stakeholders.

A metric is a quantitative level of an indicator that an organization uses to
evaluate progress.

Key performance indicators (KPI’s) are also used to assess the progress being made towards reaching a strategic goal.

Reporting is the act of evaluating stakeholders of metrics in definite formats and at particular intervals. Metrics, KPI’s and reporting are essential elements of monitoring and evaluation.

Monitoring is a continual process of data collection that is used to decide how well a solution has been executed in comparison to the anticipated outcomes. While an evaluation is the methodical and impartial evaluation of a solution both to decide its status and success in meeting objectives over time and to pinpoint ways in which to enhance the solution to better meet its objectives.

The top concerns of a monitoring and evaluation system are the planned goals and results of a solution, as well as its inputs, activities, and outputs.

Metrics and key performance indicators are made up of components, which are:

1. Indicators: An indicator is a tabular display of the outcomes of assessing one or more specific measures in response to a stakeholders’ concern.

A good indicator has six attributes, which are:

  1. Clear: it should be exact and explicit.
  2. Relevant: it should be suitable to the concern.
  3. Economical: it should be accessible at a reasonable cost.
  4. Adequate: it should provide an adequate basis on which to evaluate performance.
  5. Quantifiable: it can be independently confirmed.
  6. Trustworthy and credible: it should be based on proof and investigation.

Some indicators may help guide the stakeholders more than others. After some time the stakeholders would be able to identify the weaker indicators and improve on them.

When setting up an indicator, the business analysts should think about its source, process of collection, ease of collection, collector, and the cost and frequency.

2. Metrics: Metrics are quantitative indicators that are measured at a particular point in time. A target metric is the goal to be attained within a specified period of time.

In establishing a metric for an indicator, it is essential to have a clear understanding of the baseline starting point, resources that can be dedicated to refining the factors covered by the indicator, and the stakeholders’ concerns.

3 Structure: setting up a monitoring and evaluation system requires a baseline collection of data, a data collection structure, a data analysis structure and a reporting structure.

Baseline information is the data provided immediately before or at the beginning of a period being assessed. Baseline data is used to both learn about a recent performance and measure its progress from that point onwards.

The data collection structure covers units of analysis, sampling methods, data collection instruments to use, collection frequency, and
who is responsible for the collection.

The analysis structure specifies both the methods for overseeing the analysis and the data consumer, who may have strong interests in how the analysis is being managed.

The reporting structure covers the report templates, recipients, frequency, and means of communication.

There are three key factors used in evaluating the quality of indicators and their metrics and these are:

  • Reliability: this is the degree to which the data collection approach is stable and consistent across time and space.
  • Validity: this is the degree to which the data clearly and directly measures the performance which the organization wants measures.
  • Timeliness: this is the suitability of the frequency and idleness of data based on the management’s need.

4 Reporting: usually, reports are compared to baseline values, current metrics, and target metrics with computations of the differences displayed in both complete and comparative terms.

When creating a report, trends are usually more trustworthy and important than absolute metrics. While visual presentations tend to be more effective than tables, especially when using qualitative text to explain the data.

Metrics and key performance indicators has both its strengths and limitations, which include:


  • A monitoring and evaluation system allows stakeholders to understand the degree to which a solution meets an objective.
  • The indicators, metrics, and reports can help align the organization.
  • They also help connect the organizational goals to its objectives.


  • It requires the collection of huge amounts of data which can be quite expensive and time consuming.
  • The metric system might end up being too bulky and difficult to use.
  • If certain metrics are being used to monitor the employee’s performance, they would focus their efforts on those metrics to the detriment of other important activities.