Saturday, September 22, 2012

Key Performance Indicators

Key Performance Indicators is a jargon that is used in almost every industry whether it is IT, Automobile or Online business.  KPI is a Metric but a Metric is not necessarily a KPI! There will be a target specified against each KPI and the value can be above or below the target set. One may collect 20-25 metrics for a department but there might be 5 or 6 metrics which can be used to track the performance of the group or the department. These metrics are generally classified as KPI's and each KPI can be lined to the goal of that department. KPI is decided by management and will be aligned to the program or organization goals.KPI is easy to understand and everyone working in the department from the lowest role to the highest role should be able to interpret/understand the metrics. Whenever the KPI value falls below or above the target values action should be taken. It is difficult for an organization to perform or for a client to monitor the performance of a partner without KPI's.

The source of data should also be chosen and extreme care needs to be taken while preparing the KPI's. It will be good to document the criteria used for preparing the KPI as there will be consistency and accuracy in the data prepared. KPI's are normally prepared and reviewed on a weekly or monthly basis in the form of a Dashboard. It is also important to share the KPI dashboard with all the members of the department so that everyone is aware of how a group is performing. Defining too many KPI's will be useless for decision making. The KPI should also satisy the SMART Criteria which is

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time Bound

 A few examples of KPI.’s that can defined for a testing program are

  • Defect Leakage
  • Defect Acceptance Ratio
  • Test Design/Execution Productivity
  • Percentage of Automation
  • Test Coverage
  • Requirements Coverage

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