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Key Performance Indicators (KPI)

Definition - What does Key Performance Indicators (KPI) mean?

Key performance indicators (KPI) are measurements used to identify and quantify business performance.

KPIs are selected through a management framework. To identify and establish the critical KPIs, an enterprise process must be created to meet the following requirements:

  • Contain clear objectives
  • Be measurable, quantitatively and qualitatively
  • Identify and resolve organizational variances

Techopedia explains Key Performance Indicators (KPI)

A KPI can really be anything that an organization identifies as being an important driver of the business. While somewhat buzzwordy in nature, the idea is that if something doesn't get measured, it doesn't get improved. A KPI serves to measure results and then quickly flag them if they need attention.

KPIs aren't just financial data. For example, the closing rate of a salesperson might be considered an important factor in a business' success even though you wouldn't be able to see data like this in a company's financial statements.

While this term is business-oriented in nature, many IT Professionals would come across it because of its use in business intelligence (BI).

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