Key Performance Indicator (KPI)
Definition
A performance indicator measures an aspect of performance that is essential for a goal.
A KPI is not just any available metric. It should be tied to a goal, a definition, data source, frequency, and responsibility.
Simply explained
Like a selected measurement display that shows whether an important goal is being achieved.
Why it matters in practice
Relevant for automation ROI, marketing, website performance, and process improvement.
Example from business
For a support process, throughput time is defined as a KPI instead of just the number of tickets processed.
Limits and pitfalls
- Choosing vanity metrics; KPIs without goals; mixing definitions between systems; considering only averages.
Origin & history
Performance Measurement is an established management field; standards like ISO 22400 define KPIs specifically for manufacturing operations.
Use in mid-sized companies
- Possible application in SMEs: Define a few decision-relevant indicators per use case with baseline and target value.
Frequently asked questions
Is every metric a KPI?
No. Does a KPI need a goal reference? Yes.
Sources
- KPIs for manufacturing operations management · ISO 22400-2, KPIs for manufacturing operations management
- Key Performance Indicators · Microsoft Business Central, Key Performance Indicators
Source check: 10./11.10.2026.
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