How to Establish IT Key Performance Indicator (KPIs)

The three essential steps to the establishment of KPIs are:

1. Identify KPIs translatable from the business goals.
a. They should be measurable and quantifiable.
b. They should be dependent variables that respond to some independent variables. For example, inventory is an independent variable that affects the supply chain cost as a dependent variable.

2. Identify in the value-driven tree the independent variables that affect the subject KPIs or the dependent variables. This is done because these independent variables can be adjusted to have a desired effect on the subject KPIs or the dependent variables.

3. Identify all such KPIs that form a natural cluster