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Is there a book to help us develop Key Performance Indicators (KPI)

By ITIL® from Experience©

Two books complement each other well. Here are their book review.

Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs (2010) by David Parmenter Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs (2010) by David Parmenter
Measuring ITIL: Measuring, Reporting and Modeling - the IT Service Management Metrics That Matter Most to IT Senior Executives (2006) by Randy A. Steinberg Measuring ITIL®: Measuring, Reporting and Modeling - the IT Service Management Metrics That Matter Most to IT Senior Executives (2006) by Randy A. Steinberg

Book Review of: Key Performance Indicators (KPI): Developing, Implementing, and Using Winning KPIs1


David Parmenter makes this complex topic simple. A practical and easy read, this book is like a project in a box. It provides templates, checklists, workshop agendas and even includes an invitation to be sent by the CEO.

Even though it uses the Balanced Scorecard2 as a foundation, the reader does not need to be familiar with Norton and Kaplan's work3 to use or understand this book.

Seasoned practitioners and consultants will easily recognize that the advice provided is based from having done this work. He found an effective way to share his experience, insights and lessons learned.

By using causal relationships, an innovative method is proposed to identify the Critical Success Factors (CSF) from the many Success Factors of an organization. Once the CSFs are known, KPIs are easily identified. A key is to identify which indicator supports the CFSs since "every measure should have a reason to exist, a linkage to an Success Factors or CFS” (p. 33). He also distinguishes KPIs from:

  • Key Results Indicators (KRI);
  • Results Indicators (RI); and
  • Performance Indicators (PI).

The use of a centralized Performance Measures Database is suggested to track each one of these indicators. By making the database available to all teams, it enables groups to shares their measures and avoid duplication of effort. The work of Stephen Few's book “Information Dashboard Design: Effective Communication of Data” is also leveraged to show how to develop effective reports and dashboard.

Although the general theme of the book is to implement PKIs at the enterprise level, it does recognize that they can be implemented for a small group in the organization. The important of having the CEO support and having the right timing for this project is emphasized (see Do we need CIO support to succeed. From an IT perspective, the CEO can simply be substituted for the CIO and all that is put forth applies.

The only draw backs are that: 1) the supporting webcasts frequently referred to in the book are no longer available, and 2) true to an educator, some material is repeated.

This book is a must to anyone developing KPIs whether they are in Information Technology or in another department.

"For a performance measure to be a KPI it has to be linked to one or more of the organization's critical success factors, more than one balance score card (BSC) perspective, and the organization's strategic objectives. Performance indicators, being less important, are normally linked to the organization's success factors (SF)." p. 34


Book Review of: Measuring ITIL®: Measuring, Reporting and Modeling - the IT Service Management Metrics That Matter Most to IT Senior Executives4


The most important part of this book is found in the first 34 pages5 where the concept that a Key Performance Indicator (KPI) is obtained by calculating metrics (e.g. Change Efficiency Rate, Customer Impact Rate). The rest of the book’s chapters focus on the ten ITIL® v2 processes and other dimensions to measure.

Not only does it make it clear that a KPI is the result of calculating metrics, the approach uses Tolerance metrics or thresholds to indicate when a decisions or action needs to occur. Thus, these Tolerances binds management to take action and make decisions when metrics are not within pre-determined acceptable operating ranges.

An MS Excel ITSM Metrics Modeling Tool is provided on a CD with the book or for download. Also included is a spreadsheet of the DICE Model developed by Harold L. Sirkin, Perry Keenan, and Alan Jackson of the Boston Consulting Group. This simple spreadsheet can be used to predict the likelihood of success for an ITIL® implementation or improvement effort.

“From a management point of view, true KPIs, or Key Performance Indicators, provide a basis for making business decisions.” p. 10

Summary

These books complement each other well. David Parmenter’s book on KPI provides a pragmatic approach to identify Critical Success Factors and Indicators and to bring the organization along this change project. Randy Steinberg’s book is focused on the mechanics of measuring the ITIL® processes.

Combining both books provides a pragmatic approach to developing and implementing KPIs.


Last updated on: 2017-11-15
Published on: 2014-08-20

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"The SLA explains the service. It does not predict the performance of that service. Explanation does not mean prediction." Denis Matte

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2. “The four perspectives of the scorecard - financial measures, customer knowledge, internal business processes, and learning and growth - offer a balance between short-term and long-term objectives, between outcomes desired and performance drivers of those outcomes, and between hard objective measures and softer, more subjective measures.” Source: Book description from Amazon.com


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