Well-designed KPIs and metrics are one of the crucial aspects of success for an organization’s digital transformation initiative. Continuous KPI monitoring is essential to keep projects and initiatives on track. According to Michael Schrage of MIT Sloan School of Management and Vansh Muttreja and Anne Kwan of Deloitte Consulting, KPIs should lead, not track digital transformation initiatives.
But as important as they’re, there’s still a lot of confusion on what KPIs and metrics are, and how they are different from each other. As more organizations are investing in their digital transformation initiatives, there’s a lot of discussion among experts on the KPIs and metrics to track.
In this article, we explore what these terms signify and how they can be monitored with the internet of things.
What are KPIs and Metrics?
KPIs or Key Performance Indicators are a score or measure of how much an organization, team, or individual has achieved their strategic objectives. The success of any initiative will depend on many factors and KPIs simplify them into numbers that are easy to understand and evaluate.
For example, consider an organization introducing an IIoT predictive maintenance system to their manufacturing unit. The success of this solution will depend on how well the system can measure the various operational parameters, how reliable it is, the ease of adoption by the users, and other factors.
And if all of these factors worked optimally, the system should reduce the downtime period and maintenance costs. Since it’s difficult to track all of these factors objectively, these two factors are chosen as KPIs. And by tracking these two, the organization can conclude if all the factors worked optimally.
Metrics, on the other hand, measures the activities that help an organization achieve its strategic objectives. Let’s take the example of the predictive maintenance system that we discussed above. In this case, a lot of activities come together to make the program successful. Two of these could be deploying sensors and training the employees. And the metrics for these two activities could be the number of sensors deployed or the percentage of employees that successfully completed the training.
While KPIs improve as a result of the program, metrics measure the changes that have to be made as part of the program. In some ways, we could say that metrics track the numbers that ultimately contribute to changing the KPIs.
While KPIs are often used to measure the success of an initiative, in reality their role is to drive the program. They’re not defined after the program to showcase its success, but rather before beginning to define what success means.
How are KPIs and metrics visualized?
For a successful initiative or program, key performance indicators and metrics are constantly measured and monitored. The idea is that organization and the managers will be able to keep track of how much they’ve achieved and what is holding them back.
And for this, organizations use a variety of KPI monitoring and reporting systems. In many cases, these KPI monitoring and evaluation systems are linked to digital workplace tools and generated automatically.
For instance, the number of products assembled by individual employees in an assembly line may be tracked with RFID tech and logged automatically. In another example, a service desk dashboard may automatically log and keep track of the number of tickets in an hour by individual employees.
In some situations, the metrics may be presented during regular meetings, while in other instances they’re constantly displayed for the relevant parties to see. For example, KPIs pertaining to the factory floor may be displayed for the workers there.
Visualizing these metrics helps teams identify and understand trends and patterns in the KPIs. The goal of visualization is to help all parties understand the available data, find insights, and adjust their course of action.
How can IoT improve KPI monitoring systems?
While KPIs are powerful tools, they’re not often that easy to measure. It is not easy to collect valid data points that make up the KPIs and in many cases the process is manual. Therefore, the data collection alone takes up a lot of resources and in many situations, they end up being estimates.
For example, it may not be feasible to measure the accurate number of participants in a company event or the units produced in an assembly line.
Another common issue is that it’s not easy to measure these KPIs in real-time; in some cases, the measurements can be too late to make a difference.
IoT monitoring solutions can streamline this process to a large extent. Sensors can accurately and automatically collect the required data in real-time; and instead of manually adding up the numbers, organizations can automate the KPI monitoring process.
IoT remote monitoring can also offer more data points to organizations that were previously unavailable. For example, IoT sensors let organizations collect previously unavailable continuous data about machines on the factory floor. Remote monitoring solutions opens up possibilities for organizations to design and use better KPIs and use them to drive growth.
Bridgera’s state-of-the-art IoT platform can empower you to design and monitor better KPIs
Organizations all over the world have successfully used Bridgera’s Industrial IoT platform to design better KPIs and monitor them efficiently. Reach out to us to discuss how we can help your organization achieve its strategic objectives using IoT.