What are measures, dimensions and KPIs?
In Business Intelligence environments, a measure is a property on which calculations (e.g., sum, count, average, minimum, maximum) can be made. Simple examples are revenue in a currency or amount of orders.
In this context, dimensions are possible ways to split the measures in business areas. Typical examples are countries, products, customers, suppliers and most important time. When you analyze data you often combine two one measure with two dimensions. For example you want to see the revenue of products of this year.
A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity in which it engages. Often success is simply the repeated, periodic achievement of some levels of operational goal (e.g. zero defects, 10/10 customer satisfaction, etc.), and sometimes success is defined in terms of making progress toward strategic goals. Accordingly, choosing the right KPIs relies upon a good understanding of what is important to the organization. ‘What is important’ often depends on the department measuring the performance – e.g. the KPIs useful to finance will really differ from the KPIs assigned to sales.
Where is the difference between a measure and a KPI?
When revenue is a measure and is defined as KPI, then there is no difference at all. But when you think of a KPI like revenue per order than you combine two measures to calculate one KPI. So it depends…
What is a KPI catalogue?
We do need a catalogue or glossary where we entry all the definitions of possible measures, dimensions and KPIs. This catalogue or glossary contains all definitions. A possible way to start a catalogue is to define the measures in an excel-sheet.
- Gross Revenue = orders * orderValue * tax
- Net Revenue = orders * orderValue
Why do we need a KPI catalogue?
We do not need the KPI catalogue when we have up to ten measures and KPIs. My experience showed me, that after a short time new measures and KPIs are defined from day to way and are calculated in reports, dashboards, queries or data models. And after a short period, there are more than ten or twenty KPIs in an enterprise. And not everyone can remember the calculation and the fields in the source system they base on.
My recommendation is that you should start creating a KPI catalogue when you start developing data models. This catalogue should be made public so that every stake holder can inform him- or herself.
About Tobias Riedner
Tobias Riedner foundet WYCDWD.com in 2015. He works and worked as innovator, consultant, analyst and educator in the fields of business intelligence and data warehousing. He learned a lot from the best consultants, managers und educators in the past and shares his knowledge worldwide. He works for a steady growing traditional company which is a leader in industry 4.0.