Anthony Honaker
VP Product Strategy & Development
Cohesive Solutions
Decoding for Your Organization
1 1
© 2019 | Fluke Digital SystemsConfidential Document2
28 Years in CMMS & EAM
Customer, Implementer, Trainer, Product Management, Design…
…Architecture, Development, Product Strategy
2
Anthony HonakerVP Product Strategy & Development, Cohesive Solutions
Speaker Bio
© 2019 | Fluke Digital SystemsConfidential Document3
Is KPI is a Four Letter Word?
© 2019 | Fluke Digital SystemsConfidential Document4
Metrics Vs. KPIs
• Just because we have the ability to measure something does not mean it will inherently provide value
• A metric is simply a data point. Without context, this number does not communicate whether
• We are doing well or underachieving• We should act
• Example:• Monthly Critical Spares Inventory Growth
0%< 0% > 0%
© 2019 | Fluke Digital SystemsConfidential Document5
Decoding KPIs
© 2019 | Fluke Digital SystemsConfidential Document6
K is for Key
• Organizations and their maturity are unique• Each organization focuses on goals specific to its
environment• A metric must be key to the organization• Not all metrics can be key• Need clear understanding of importance
• Why expectations should be met• Consequences of not meeting targets
• At executive levels within an organization, these can be straightforward measures:
• Revenue, earnings, margins, etc.• At lower levels, however, it is more difficult to correlate
measures with strategic objectives
© 2019 | Fluke Digital SystemsConfidential Document7
Aligning Measurement with Objectives
7
• Identify connections between Objectives, Values Drivers and KPIs/Measures, which communicate value creation
• Note this is an Objective Driven approach, rather than Data Driven
• Understand relationships between Objectives - how lower level objectives support higher level objectives
• Ultimately, Visualize Performance (KPIs), Activities, Planned and Active Initiatives in an Objective context
Organizational Objectives
•Financial•Safety•Service Levels
Asset Management
Objectives
•Availability•Reliability•Cost•Safety
Value Drivers•Processes•Systems•Assets
Measures & KPIs
•Calculation•Data Inputs•Data Quality
© 2019 | Fluke Digital SystemsConfidential Document8
Leading and Lagging Objectives / Indicators
8
Lagging indicators• output oriented
• measures results
• easy to measure
• harder to improve or influence than related leading indicators
Leading indicators• input oriented
• measures process
• hard to measure
• easier to influence than related lagging indicators
Inventory Accuracy
Availability of Parts
Downtime
Leads Leads
Lags Lags
© 2019 | Fluke Digital SystemsConfidential Document9
KPIs have a Shelf Life
• KPIs inherently have a lifecycle• As organizations mature and other factors
(environment, market, etc.) change, they must reevaluate what they're measuring, how and why
• Some organizational objectives are finite, so it doesn't make sense to manage all KPIs perpetually
• But even KPIs tied to perennial objectives must be reviewed periodically for relevance and accuracy
• We shouldn't continue to measure our performance with the same metrics we've always used
© 2019 | Fluke Digital SystemsConfidential Document10
P is for Performance
• In order for a metric to be a KPI, it must provide a means to measure and impact performance
• Two key factors:• a goal (target or expected result or range)• a time frame (a date to achieve the result or a range of
dates to achieve/maintain the result)• With a goal and time frame, an organization can determine if
it is underperforming and can react appropriately• Organization can proactively implement initiatives and
monitor its progress in pursuit of the goal
© 2019 | Fluke Digital SystemsConfidential Document11
KPIs as Contracts
• Think of KPIs as Contracts between some performing organization (e.g., Asset Management, Schedulers, Quality Control, etc.) and the enterprise (or organization receiving service)
• The KPI Contract defines • Ownership and Responsibility - To and From
Parties• Dates of Service - Delivery/Commitment Date and
Expiration/Renewal Date• Statement of Work – Description of service and the
metric(s) used to measure• Levels of Service – Target or expected range of
values• Terms and Conditions –
• Frequency of monitoring/reporting• Expected responses and consequences of
missing targets
© 2019 | Fluke Digital SystemsConfidential Document12
KPI Trends
• Meaningful, directional context• Potentially highlight correlation to initiatives.
Examples:• the number has risen consistently over the last
12 months• the summer months are always 15% higher
Looking in the rearview mirror is not a stand-alone strategy for driving
continuous performance.
© 2019 | Fluke Digital SystemsConfidential Document13
KPIs Drive Action
• A KPI must serve as a catalyst for action to improve the business:
• Validation of business objectives/alignment by visualizing performance that directly supports specific goals.
• Exposure of process risks by actively comparing planned versus actual performance.
• Highlighting any areas where improvement is needed.
• Identification of coaching opportunities by detecting and alerting the right people of non-conformance events or trends.
© 2019 | Fluke Digital SystemsConfidential Document14
I is for Indicator
• The metric must be aligned with the business by having a consistent and agreed to definition that indicates the state or level of a process, e.g.,
• Success / Failure• Target (Green), Warning (Yellow), Alert (Red)
• A KPI does not mean much if it is not clearly defined; and means even less if that definition is not consistently applied across the enterprise.
• An indicator must be trustworthy• An indicator must communicate some degree of insight. Take
ready backlog for example:• 800 Open Work Orders• 2,400 Planned Labor Hours• 6.66 Labor Weeks (12 Tradespersons @ 60% Availability)
© 2019 | Fluke Digital SystemsConfidential Document15
Trust in Data & Processes
15
• Trustworthy Information – trustworthiness refers to an information system’s accountability and its ability to produce reliable and authentic information and records. Trustworthy denotes integrity, ability, faith, and confidence.
• Data Quality – the condition of a set of values of qualitative or quantitative variables. There are many definitions of data quality but data is generally considered high quality if it is fit for its intended uses in operations, decision making and planning.
• Specific to Measures and KPIs – a measure of the ability of data to be used as a basis for the calculation of a measure/KPI
• Data Confidence – the level of trust an organization can place in data based on characteristics such as System and Process Integrity, Completeness, Currency, and Governance
© 2019 | Fluke Digital SystemsConfidential Document16
Measuring Trustworthiness
Measure Alignment Data Quality Data
ConfidenceTrustworthy Information
Alignment
• Excludes Non-Maintenance Work Orders
• Includes PMs as well as CMs
Quality
• Has Scheduled Finish Date
• Has Actual Finish Date
Confidence
• Has Actual Labor Hours
• Has Priority
Example Measure: Critical Work Orders Completed On Time
In God we trust; all others must bring data- W. Edwards Deming
© 2019 | Fluke Digital SystemsConfidential Document17
Putting it all Together
RATE (15)XCELERATE (36)KEY (19)PERFORM (30)PERFORMANCE (40)CAT (11)INDICATOR (28)
TOTAL - 179
© 2019 | Fluke Digital SystemsConfidential Document18
Common KPI Problems
18
• KPIs are not aligned with Organizational Objectives, affecting buy-in at various levels from Executives down to line-level employees
• KPIs should clearly reflect achievement of Organizational Objectives• KPIs not aligned with Objectives may incent the wrong behavior
• KPIs are used for measurement only, rather than measurement and management• KPIs should be Action Oriented with the intent to positively impact performance, cost, and/or
risk• Objectives & KPIs are not reasonably attainable• KPIs are not timely
• KPIs shouldn’t consist solely of lagging indicators, available well after the period of performance• Relationships between leading and lagging indicators should be well understood providing for
the opportunity to positively impact impact performance, cost, and/or risk during the period of performance
• KPIs are used for CYA purposes or are fear based• KPIs are not trusted
• Measures are based on poor quality data• Measures require significant data cleansing, preparation or other manual modification
Questions? Feel free to ask.
Q&A