Explanation:
Key performance indicators (KPIs) provide insights into the operational effectiveness of the concept or capability that they monitor. Key Performance Indicators is a set of measures that a company or industry uses to measure and/or compare performance in terms of meeting their strategic and operational goals. KPIs vary with company to company, depending on their priorities or performance criteria. A company must establish its strategic and operational goals and then choose their KPIs which can best reflect those goals. For example, if a software company’s goal is to have the fastest growth in its industry, its main performance indicator may be the measure of its annual revenue growth.
Incorrect Answers:
A: Capability maturity models (CMMs) assess the maturity of a concept or capability and do not provide insights into operational effectiveness.
B: Metric thresholds are decision or action points that are enacted when a KPI or KRI reports a specific value or set of values. It does not provide any insights into operational effectiveness.
C: Key risk indicators (KRIs) only provide insights into potential risks that may exist or be realized within a concept or capability that they monitor. Key Risk Indicators are the prime monitoring indicators of the enterprise. KRIs are highly relevant and possess a high probability of predicting or indicating important risk. KRIs help in avoiding excessively large number of risk indicators to manage and report that a large enterprise may have.