Key Performance Indicators (KPIs)

• A way to measure the impact of development initiatives on business outcomes
• A way to measure the value of development initiatives
• KPI Driver Trees – or Value Driver Trees – are a good way to visualize the linkages between business objectives (Increase Revenue/Decrease Costs/Reduce Risks), the strategy to achieve those objectives (Increase # Visitors/Increase Revenue Per Visitor), and the actual work (feature development) needed to implement that strategy.

Here is a simplified example for an e-Commerce business. (There would be additional trees for other business objectives like Reduce Costs, Reduce Risk and so on):

The impact of all new proposed work (features) should be measurable via one or more of the KPIs on the right side of the chart. For example, in planning a release, or perhaps at a SAFe PI Planning event, we generally compile a list of product features, which are then ranked by business value. The basic question stakeholders want answered is: Why do we want to build this specific set of features, or what is their value, or what will be their impact on the effectiveness of our business processes? One straightforward way of answering that question is to identify which KPIs each feature is intended to drive.  In this way we can control which strategy levers we wish to push in order to achieve specific Business Outcomes.

Let’s say we want to improve the Revenue Per Visitor, which is measured by the Conversion Rate KPI (the percent of site visitors who actually make a purchase). We could build features that deliver more high resolution images of the product from multiple angles. We could also create functionality for customer reviews of the product, or improving the way existing customer reviews are presented. Both of these features are designed to make it easier for a site visitor to make a purchase decision, and each can be directly linked to the Conversion Rate KPI. The impact (or value) of those  specific features on strategy and outcomes is now measurable.

Features enable business value.

Next, once we have our planning done, and have estimates for each feature, we can take a look at where we are actually prioritizing our effort versus the strategy or objectives we are seeking to accomplish. For example (numbers are story points) – this is the kind of data I’d like to see at a PI Planning event. In the case of SAFe PI Planning, setting PI Objectives is straightforward: The High Resolution Images feature contributes to the objective of increasing the Conversion Rate. It is clear that this work directly enables business value, and it does so in a measurable way via a directly connected KPI.

Over time we can track the impact our efforts are having on our business performance, for example:

Make it agile by building in a feedback loop (checking and adjusting). Adjustments in strategy can be made by working on specific KPIs in order to shift focus where necessary.

Ideally the most important KPIs for your business would be presented on a single dashboard that provides a full picture with meaningful and actionable insights. Use dashboards to help visualize progress on achieving business objectives, and to guide adjustments in strategy.