16 Telling Signs Your Tech Team May Be Measuring The Wrong KPIs

Innovation 16 Telling Signs Your Tech Team May Be Measuring The Wrong KPIs Expert Panel® Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Aug 29, 2022, 01:15pm EDT | Share to Facebook Share to Twitter Share to Linkedin getty Businesses and teams set key performance indicators for two reasons: to track how they’re doing and to find ways to improve.

Data is essential for smart business decision making, but certain data can be misleading when misinterpreted or given too much weight. As Sherlock Holmes said, “There is nothing more deceptive than an obvious fact. ” Overlooking essential KPIs and/or placing too much value in others can give a tech team an unrealistic picture of the success of their efforts and prevent them from taking needed steps to improve.

Ultimately, being guided by ineffective tech KPIs is likely to damage the business as a whole. Below, 16 members of Forbes Technology Council share some telling signs that your tech team may be measuring wrong or misleading KPIs and what you should do instead. 1.

The Metric’s Revenue Impact Isn’t Defined All the KPIs a tech team creates for themselves are eventually meant to answer the ultimate question: “How do our tech initiatives drive bottom-line revenue?” So as a rule, any KPI being used should be able to be explained in terms of its relation to the revenue metric. If you cannot tell me how your KPI impacts revenue, then it’s not a good KPI. – Ritvij Gautam , TryMyUI 2.

You’re Starting With Data You Already Have Most teams start with data they have or metrics they produce when setting the No. 1 KPI. While this is understandable, it can be misleading because it starts with the presumption that you’re tracking the right metrics.

The key is to understand what metrics impact your product or customer and then work backward from them, even if a particular metric does not exist or align with your company’s output. – Frederick John , Diebold Nixdorf Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify? MORE FOR YOU Google Issues Warning For 2 Billion Chrome Users Forget The MacBook Pro, Apple Has Bigger Plans Google Discounts Pixel 6, Nest & Pixel Buds In Limited-Time Sale Event 3.

Your KPIs Provide Interesting, But Irrelevant, Information A KPI is misleading when the outcome has no bearing on the decisions being made or it doesn’t advance the understanding of an issue. Often, the output of a significant amount of analysis is interesting, but irrelevant. Make sure your first step is asking the right questions.

This will help refine the required data necessary to get to an answer that can guide successful decision making and understanding. – Len Covello , Engage People Inc. 4.

Your KPIs Don’t Reflect The Current Situation Achieving set corporate goals is the main indicator of the success of a tech team. Is your team completing releases on schedule? How many bugs does the team have to sort out after a release? And most importantly, is the end customer happy with your product? Answer all these questions and compare them with your KPIs to see how your KPIs reflect the current situation. – Vasily Voropaev , Smartbrain.

io 5. Raising The Numbers Is Your Primary Goal Any KPI can go wrong, with the best indicator being when raising the numbers becomes the primary goal. KPIs should be improved through the improvement of products and services in their entirety.

Unfortunately, sometimes artificially inflating the numbers becomes the goal. It may look good on paper, but such actions will almost always detract from the overall quality of the product or service. – Julius Černiauskas , Oxylabs 6.

You Aren’t Improving (Or Don’t Have) A North Star Metric The most important decision when managing your organization based on data is choosing the right North Star metric, such that when all the other KPIs are working well, they flow up to that metric and it has a positive impact. If your KPIs move favorably and the North Star metric doesn’t, then that’s a clear sign you’re choosing the wrong KPIs. – Alex Song , Proxima 7.

The KPI Doesn’t Directly Improve The Life Of The End User If the KPI does not directly improve the life of the end user or the team, it is likely a weak indicator. It may be a vanity metric or a KPI that’s not an actual driver of the business rather than an output of a key data point or KPI. The best KPIs have a direct, measurable effect on improving the business or service for the customers and the stakeholders of the company.

– Boyan Ivanov , StorPool Storage 8. You’re Not Using Any External Data If you’re only using internal data (data that you generate) to make decisions, you will inherently only have a partial, and potentially misleading, view. This leads to misinterpreting or measuring the wrong KPIs.

Using external data (data generated outside your organization) is the best way to ensure that your models and data-driven decision making are business-ready. – Lewis Wynne-Jones , ThinkData Works 9. You’re Relying On Static, Outdated Data I’m wary of teams that get stuck relying on outdated data, because what value is it providing? For example, Net Promoter Scores show customer satisfaction at a singular moment, but today, brand perception changes on a whim.

In a matter of hours, companies can go from beloved to embroiled. Looking at such data is often a telltale sign that your team isn’t digging into the full story. – Christian Wiklund , unitQ 10.

You Aren’t Regularly Reviewing And Adjusting Your KPIs Ask your team, “Why are we tracking XYZ?” If their answer is, “That’s what we’ve always done,” then you’re measuring the wrong thing. If you don’t ask this question, your team will continue measuring against outdated data points and making decisions based on things that don’t matter. Empower your team.

Allow them to ask “why,” and embrace the opportunities to pivot in the right direction. – Jonathan Cardella , Ventive, LLC 11. An Increase In A KPI Doesn’t Correspond To Bottom-Line Improvement Ultimately, you have to care about the bottom line and the KPIs that contribute to achieving your top-priority goal.

A good indication that you’re measuring a “wrong” KPI is if you see an increase in the KPI that does not correspond to a boost in your bottom line. Frequently, leaders choose meaningless KPIs just to track some progress. So always ask yourself, “How does this help with our bottom line?” – Peter Abualzolof , Mashvisor 12.

You ‘Hit The Bullseye’ On Your First Try If the results appear to be “too good too soon”—as though you’ve hit the bullseye on your first try—take a step back and check if the wrong KPI was chosen or if the model was poorly trained (for example, the current time frame/conditions are a coincidental “perfect fit” with what has been seen in the past). Alternatively, the forecasts might have been too pessimistic. Unless someone is solving a trivial problem, it takes a while for any data engineering to yield gains.

– Pramod Konandur Prabhakar , Pelatro PLC 13. Your Results Aren’t Changing A clear warning sign is if your results are not changing. We use data to make decisions, drive execution and, ultimately, get results.

If our results are not shifting, we’re measuring the wrong thing or we’re measuring it in the wrong way. I always remind teams that while we need to use data to make decisions, we must be open to changing our methods or goals. – Chet Kapoor , DataStax 14.

You’re Focusing On ‘Proximate’ Metrics One of the best ways to determine whether you are measuring the right KPIs is whether or not your target performance changes as you react to what the indicators are telling you. Focus on “root” metrics, not “proximate” ones. As an example, you may choose to actively measure lead generation in your sales funnel, but if your real issue is conversion, then more leads just make the situation worse.

– Terrance Berland , Unicorn & Lion LLC 15. Your Dashboard Looks ‘Too Good’ Does your dashboard look too good? If your metrics lack context, don’t have clear intent or don’t guide growth, you are likely tracking vanity metrics. These are metrics that give you a false sense of security: They appear positive but hold relatively little substance.

Evaluate your metrics. Make sure they drive learning, create transparency and hold you accountable to set standards. – Nicholas Domnisch , EES Health 16.

The Team Primarily Uses The Data To Lobby For More Resources It’s important to understand that data can be used to tell just about any kind of story. To understand this, just consider the old metaphor about whether a glass is half full or half empty—both “results” rely on the same data. In other words, it’s not the data that matters as much as the interpretation of the data.

If the tech team continuously uses data to lobby for more resources and/or time, then you are probably measuring the wrong KPIs. – Blair Currie , Snibble Corp. Check out my website .

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