Techniques BABOK Guide v3, 10.28
Metrics and KPIs
In short Metrics and KPIs turn “is it working?” into numbers people can agree on. You choose indicators that reflect a goal, set a measurable level for each, define how the data is collected, and report the results to the people who will act on them.
Based on: IIBA, BABOK® Guide v3, technique 10.28 “Metrics and Key Performance Indicators (KPIs)”; Watermark Learning, BABOK v3 Study Tables, section 10.28; D. Paul, D. Yeates, J. Cadle (eds.), Business Analysis (BCS), 2nd ed., ch. 8.
On this page
What it is#
The technique measures the performance of a solution, a solution component, or anything else stakeholders care about. The BABOK Guide separates three terms that people often mix up:
- Indicator — a specific numerical measure of something that signals progress, such as “online bookings per week”.
- Metric — a measurable level of an indicator that tells you how far you have come toward a result, such as “at least 300 online bookings per week by June”.
- KPI (key performance indicator) — an indicator that measures progress toward a strategic goal or objective. Every KPI is an indicator, but most indicators are not KPIs.
The guide describes four elements: indicators, metrics, the structure (how data is collected, analyzed, and turned into results), and reporting. It also names three quality factors for indicators and metrics, explained here in plain words:
- Reliability — the measure gives the same result when repeated under the same conditions, whoever takes it.
- Validity — it really measures what it claims to measure.
- Timeliness — the data arrives in time to influence decisions.
When to use it#
The Watermark study tables link the technique to these BABOK tasks: 3.5 Identify Business Analysis Performance Improvements; 6.1 Analyze Current State and 6.2 Define Future State (deciding when business objectives have been met); 7.2 Verify Requirements and 7.3 Validate Requirements; 7.6 Analyze Potential Value and Recommend Solution; 8.1 Measure Solution Performance and 8.2 Analyze Performance Measures.
In practice, write success measures when you define business objectives, and use them again once the solution is live.
Be careful when:
- the cost of collecting a number is higher than the value of the decision it supports; the study tables warn that collecting and reporting too much is expensive and distracts from productive work;
- nobody will act on the number;
- the metric will be used to judge individual employees; the study tables note that attention can then shift to the metric itself at the expense of the real work.
How to do it#
- Start from the goal. Take a business objective from the business case or future-state definition and ask: “How would we know we are getting there?”
- Choose indicators. One to three per goal. Combine leading indicators, which give early signals, with lagging ones, which confirm outcomes later.
- Test each indicator. Is it reliable, valid, and timely? Can you get the data, and at what cost?
- Set metrics. For each indicator, a target or acceptable range, a unit, and a time frame.
- Define the structure. Data source, collection method, frequency, calculation formula, owner, and how data quality is checked.
- Design reporting. Audience, format, frequency, and the decision each number supports.
- Add feedback. The study tables stress that metrics should come with feedback. Talk to the people behind the numbers to learn why they moved.
- Review the set. Retire metrics nobody uses, and watch for signs that people are optimizing the number instead of the result.
Example#
The Workshop, a fictional chain of 12 bike-repair workshops, launches online booking and repair-status notifications. The analyst and the owner define a small measurement set. All numbers are illustrative.
| Goal | Indicator | Metric (target) | Source | Frequency | Owner |
|---|---|---|---|---|---|
| Move bookings online (strategic, so a KPI) | Share of bookings made online | 50% or more by year end | Booking system | Monthly | Owner |
| Fewer “is it ready?” calls | Status calls per workshop per day | 5 or fewer within six months | Front-desk call log | Weekly | Front-desk lead |
| Reliable notifications | Status changes notified within 15 minutes | 98% or more | System log | Daily | Development team |
| Repairs start on time | Booked repairs started on the planned day | 90% or more | Workshop records | Weekly | Workshop managers |
The analyst flags a risk in the last row: if managers are judged on it, they may quietly book longer slots to protect the number. So that metric is paired with a short customer survey on waiting time, and the owner reviews both together.
Common mistakes#
- Measuring what is easy rather than what matters → start from goals, not from available data.
- Too many metrics → keep a few per goal; each one costs effort to collect and read.
- Vague definitions such as “customer satisfaction” → write the formula, unit, source, and period.
- Numbers without context → show the trend, the target, and a short commentary.
- Targets that distort behavior → the BCS book warns that targets change behavior, sometimes badly: a salesperson chasing a sales target may cut prices too far. Improving one local number at the expense of the whole is called sub-optimization. Pair metrics that pull against each other.
- Reporting with no decision attached → give each metric an owner and a decision it informs.
- Calling every metric a KPI → reserve “KPI” for measures tied to strategic goals.
Template#
| Field | Value |
|-------|-------|
| Name | |
| Goal or objective it supports | |
| Type | KPI (strategic) / operational metric |
| Indicator definition and formula | |
| Unit and period | |
| Target or acceptable range | |
| Latest value (date) | |
| Data source and collection method | |
| Frequency | |
| Owner | |
| Audience and report | |
| Decision it informs | |
| Known limits (reliability, validity, timeliness) | |
Checklist#
- Every metric traces to a business objective
- Each indicator checked for reliability, validity, and timeliness
- Target, unit, and time frame stated
- Data source, formula, and owner defined
- Reports name their audience and the decision they support
- Metrics are paired with qualitative feedback
- The set is reviewed and pruned regularly
Sources and further reading#
- IIBA. A Guide to the Business Analysis Body of Knowledge (BABOK® Guide), version 3. International Institute of Business Analysis, 2015. Technique 10.28 “Metrics and Key Performance Indicators (KPIs)”.
- Watermark Learning. BABOK v3 Study Tables. 2016. (study aid for the BABOK Guide). Section 10.28.
- D. Paul, D. Yeates, J. Cadle (eds.). Business Analysis, 2nd ed. BCS, The Chartered Institute for IT, 2010. Ch. 8 (targets and sub-optimization).