Difference between metrics and KPIs

Metrics are the very essence of dashboards. The design of relevant dashboards undoubtedly implies a proper identification and definition of metrics (also called measures) and Key Performance Indicators (KPI). Although there is a difference between a metric and a KPI, I recently noticed that the use of the KPI term has become widespread. So, let’s make clear the difference between the two.

Basically a KPI is a metric, but a metric is not necessarily a KPI.

A metric is a measure of “anything”. It helps to quantitatively measure a situation or a trend according to various analysis axes. It is meant to assess and control events, transactions or processes and to interpret them in the light of different contexts. A metric is a number, an amount, a standard unit of measure.

KPIs are typically tied to an organization’s strategy. They help to evaluate the progress of an organization towards its vision, short-term and long-term goals. A KPI is a key part of a measurable objective, it is meant to be a metric “that matters” and that ideally can be acted on. KPIs will often be defined as ratios or averages. They will ideally be displayed as, or illustrated by, a graphical symbol (sauch as gauge, traffic lights, arrows or threshold) so as to instantly alert users whether they are on target or above or below the target.

Thus, an organization should have many metrics, but just a few KPIs.