KPIS

A KPI (key performance indicator), also known as a key indicator or performance

measure or key performance indicator, is a measure of the level of performance of
a process. The value of the indicator is directly related to an objective set in
advance and is usually expressed in percentage values.

A KPI is designed to show how progress is in a particular process or product, so it

is an indicator of performance. There are KPIs for different areas of a company:
purchases, logistics, sales, customer service, etc. Large companies have KPIs that
show if the actions developed are paying off or if, on the contrary, they do not
progress as expected.

The key performance indicators are financial or non-financial measures used to

quantify the degree of compliance with the objectives; they reflect the performance
of an organization and are generally reflected in your strategic plan. These KPIs
are used in business intelligence to reflect the current state of a business and
define a future course of action.

The act of monitoring key performance indicators in real time is known as business
activity monitoring. Performance indicators are frequently used to assess
complicated activities to measure, such as the benefits of leading developments,
employee commitment, service or satisfaction.

The KPIs are organized in a scorecard where the most important ones are
collected, based on the objectives of the company, and are clearly outlined in. It is
important to choose the correct indicators and that they are not incomplete since
the results they could be affected or the objectives would not be reached. KPIs are
communication vehicles, allowing high-level executives to communicate the
company's mission or vision of the company at the lowest hierarchical levels,
directly involving all employees in the achievement of the company's strategic
objectives.

The main objectives of the KPIs are to measure the level of service, diagnose the
situation, communicate and report on the situation and objectives, motivate the
teams responsible for compliance with the objectives reflected in the KPI and, in
general, evaluate any progress steadily

Used to calculate, among others:

 Time used to improve service levels in a given project.
Level of customer satisfaction.
Time to improve matters related to service levels.
Impact of the quality of the additional financial resources needed to perform
the defined level of service.
Profitability of a project (Return on Investment ROI)
Quality of the management of the company (inventory rotation, accounts
receivable days [DCC], and payable [DCP]

Any organization must be able to identify its own KPIs. The keys for this are:

Have a business process predefined

Be clear about the objectives or performance required in the business
process.
Have a quantitative / qualitative measurement of the results, and make it
possible to compare them with the objectives.
Investigate variations and adjust processes or resources to achieve short-
term goals.
When defining KPIs, the SMART5 acronym is usually applied, since the
KPIs must be:
Specific (Specific)
Measurable (Measurable)
Achievable (Achievable)
Relevant (Relevant)
Temporary (Timely), in the sense that it is possible to track their evolution
over time.
It is important that:
The data on which the KPIs depend are consistent and correct.
This data is available on time.

What is an SLA?
A service-level agreement (SLA) is simply a document describing the level of
service expected by a customer from a supplier, laying out the metrics by which
that service is measured, and the remedies or penalties, if any, should the agreed-
upon levels not be achieved. Usually, SLAs are between companies and external
suppliers, but they may also be between two departments within a company.

A telecom company's SLA, for example, may promise network availability of 99.999
percent, and allow the customer to reduce their payment by a given percentage if
that is not achieved, usually on a sliding scale based on the magnitude of the
breach.

SLAs are an integral part of an IT vendor contract. An SLA pulls together

information on all of the contracted services and their agreed-upon expected
reliability into a single document. They clearly state metrics, responsibilities and
expectations so that, in the event of issues with the service, neither party can plead
ignorance. It ensures both sides have the same understanding of requirements.

Any significant contract without an associated SLA is open to deliberate or

inadvertent misinterpretation. The SLA protects both parties in the agreement.

Ideally, SLAs should be aligned to the technology or business objectives of the

engagement. Misalignment can have a negative impact on deal pricing, quality of
service delivery, and customer experience.

Most service providers have standard SLAs sometimes several, reflecting various
levels of service at different prices that can be a good starting point for negotiation.
These should be reviewed and modified by the customer and legal counsel,
however, since they are usually slanted in favor of the supplier.

When sending out an RFP, the customer should include expected service levels as
part of the request; this will affect supplier offerings and pricing and may even
influence the supplier's decision to respond. For example, if you demand 99.999
percent availability for a system, and the supplier is unable to accommodate this
requirement with your specified design, it may propose a different, more robust
solution.

The SLA should include not only a description of the services to be provided and
their expected service levels, but also metrics by which the services are measured,
the duties and responsibilities of each party, the remedies or penalties for breach,
and a protocol for adding and removing metrics.

Metrics should be designed so bad behavior by either party is not rewarded. For
example, if a service level is breached because the client did not provide
information in a timely manner, the supplier should not be penalized.
The SLA should include components in two areas:

Service:

Elements include specifics of services provided, conditions of service availability,

and standards such as time window for each level of service, responsibilities of
each party, escalation procedures, and cost/service tradeoffs.

Management:

Elements should include definitions of measurement standards and methods,

reporting processes, contents and frequency, a dispute resolution process, an
indemnification clause protecting the customer from third-party litigation resulting
from service level breaches (this should already be covered in the contract,
however), and a mechanism for updating the agreement as required.

This last item is critical; service requirements and vendor capabilities change

Should the service provider be acquired by or merge with another company, the
customer may expect that its SLA will continue to be in force, but this may not be
the fact. The agreement may have to be renegotiated. Make no assumptions;
however, bear in mind that the new owner will not want to alienate existing
customers, so may decide to honor existing SLAs.