Type of KPI – Variance

Variance(s) are used extensively in every day to day reporting scenarios. Variance can be computed on any base KPI or Measure and predominantly represented as a percentage number. Whole numbers are also used, but choosing between a Numeric (#) or Percentage (%) notation depends on the end-user.

Variances perform the important task of “Measuring” a KPI based on a pre-defined baseline.  The deviation from baseline gives the end-user a quick glance at performance against the defined baseline, which is highly different from the concept of Statistical Variance. Performance of a KPI is deemed either Good or Bad based on the business process and logic.

Some examples of Variances are

  • Actual Vs Budget: Compares the performance of Actual against Budgeted Value i.e. Two different Measures. If we are comparing Expenses, then overshooting the Budget is defined as Bad performer whereas in context of Revenue it will be seen as Good performer.
  • Current Period VS Same Period Last Year (SPLY): Compares the performance of the same KPI from two different time periods. Considering the same example illustrated in previous point, if we are comparing Current Year and Previous Year, then a positive variance for Expense is defined as Bad performer whereas in context of Revenue it will be seen as Good performer.

More information on “How to represent a Variance in % form” from User Interface perspective.