Product management KPIs are very crucial to the success of any project, especially if it is grand and involves multiple phases. KPIs are the best existing way of managing projects and products to ensure the activities remain within set scopes.
KPI is simply an acronym for key performance indicators which are used to measure the performance of a project at any given point. They basically indicate how much progress has been achieved and whether it is meeting the set objectives. Product management performance indicators are therefore analytical tools that should be taken very seriously.
There are many KPIs that can be formulated and they vary depending on the type of project being handled.
Characteristics of Product Management KPIs
As usual, product management key performance indicators is the critical success factor for any business and must be approached comprehensively. Usually the KPIs are developed in early stages along with objectives. It is wise to involve everyone in the establishment including employees when forming KPIs to ensure each individual is capable of tracking progress.
These performance indicators must be vividly described and measurable. They are analysis metrics and must therefore be quantifiable. Just like most analytics, the KPIs inform business what is going on with the product (its state and what users are doing). It however does not satisfy the “why” question.
They are outcome-oriented measurements that provide insights on the current status of a process. Another important characteristic to note is that KPIs are not universal which means they vary depending on the type of business and process in question. Different products/projects are measured using different metrics.
Product Management KPIs – Examples to Use
As much as these are very advantageous in strategic positioning, the major issue lies with their formulation. These measurable values must be carefully and precisely formed if the business is to achieve its objectives. Any focus on the wrong metrics is a potential step towards poor performance. A good KPI will include the most important business performance objectives across all elements of the teams involved.
They are agreed on before commencement of the project and can be measured, shared and analyzed among organizational departments at any given time. The teams involved should be poised to track accurate metrics in their assigned area. While the key performance indicators vary from project to project, some aspects and metrics are important to any business.
Some examples that can be used include the following:
- Deviation of set hours of work – This is an important KPI that should be assessed. Processes such as budgeting and training heavily depend on understanding the tasks involved, those that take more time and those that need less time. During the product management lifecycle, it will also be important to acknowledge teams that had to go above and beyond to deliver given services. Deviation of working hours can therefore be used to build impartial incentive and reward programs. Besides, it offers a metric that can be used to improve time allocation in the future.
- Planned Budget Deviation – To track any waste and inefficiencies, it is important to know how, where and why the budget stipulated for your project was deviated. This will also help in better planning for future unforeseen challenges inherent to your projects.
- Missed milestones – This is often measured as a percentage. It is important to keep records of achieved, missed and shifted milestones. Achieving goals and milestones is always a rejuvenation and motivation for any project. When too many milestones are not accomplished, teams may feel frustrated. Keeping these records can help in restarting certain parts as well as in future projects.
- Cost variance metrics – Keeping track of cost variance is important in two major ways. It helps management to identify which teams were more efficient in their expenditure and provides sufficient data that can be used in future decision making. This data also presents the actual cost of work performed which can be compared against budgeted cost for the same work. Other analysis such as cost performance index and cost schedule index can thus be calculated with ease.
There are many other key performance indicators that can be used to measure the progress of business processes. They include scheduled variance, scheduled performance index, estimate at completion, percentage of overdue assignments and many more.
The fundamental principle of forming KPIs is that they must be measurable and focused on performance goals of the organization. Tracking accurate metrics is paramount to successful completion of projects.
Advantages of KPIs
There are many primary benefits of using key performance indicators in today’s volatile, competitive and unpredictable business environment. The major challenge of management is to demonstrate their teams contribution towards top-line and bottom-line goals of the organization.
There is no justification for not measuring efficiency or focusing on wrong metrics as this could risk an entire budget. KPIs are important values that do not only measure performance, but also monitor progress, offer a baseline for correction and provide ample data for future decision making. Organizational success relies on building efficient teams that will react fast to mitigating risks and stretch their boundaries to deliver required services.
To achieve clear visibility of such aspects require measurements that reveal overall effectiveness of the team. Product management key performance indicators therefore help management to track performance at all levels (production and employee). These metrics offer analytical data on trends, dynamics and characteristics which are very useful in decision making.
When it comes to key performance indicators, there is only one major concern. These aspects must be clearly defined and mapped down in the preliminary phases of the product management cycle.
If the wrong indicators are chosen, the organization may focus on wrong metrics which corresponds to wrong direction, poor allocation of resources and absolute failure. It is therefore very critical that the indicators are precisely formed to measure organizational goals accomplishments.
Formulating and tracking product management KPIs is a common practice for most modern businesses. This way, companies have been able to build highly efficient teams that can plan, budget and accomplish various projects within the shortest time possible. It also reduces wastages and eases decision making after completion of the first few projects. It is however necessary to remember that KPIs vary from one project to another and the approaches given to any will certainly differ as well.