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July 9, 2007

What is metrics and what are the different types of metrics

By: Milind Zodge

Overview
Any BI application's main role is to show information based on some measurements. These measurements are metrics. E.g. you measure how much sale you have done, so total sales revenue is your metrics. In this article I am focusing on the types of metrics and when and how to use a proper one in the application.

Details
There are three main types of metrics you can use in your application:

1.Leading Indicators: If you want to measure activities like how many touches are required to convert a prospect into a customer; leading indicator metrics are used, which measures activities. Generally these indicators will show how many calls/activities you need to do to achieve you goal.

2.Lagging Indicators: If you want to measure any business financial amounts like sales revenue; lagging indicators are used, which measures outcome of the activities. Generally these indicators will show where you stand currently.

3.Key Performance Indicators (KPI): If you want to see how is your performance and where you stand, is it good or bad then Key Performance Indicators are used which measure the performance. E.g. If you want to see how is sales revenue with respect to sales quota

Conclusion
A proper metrics is used based on which application you are designing for. If it is a BAM-Business Activity Monitoring then Lagging Indicators or KPI will convey the information.

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Posted by Milind Zodge at 9:00 PM | Comments (2)