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Erik Hoffmann
Erik Hoffmann
VP Products at Mirror42

KPI Library
Founder

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Top down, or bottom up?

Posted almost 10 years ago

No, you can read this article safely at work. I see two common approaches in enabling business performance management.

The first is bottom-up: you have data from various systems, you marry them together, and you have a common set of business data, on which you base your reports and KPIs. The second approach is top-down: you first define what your data needs are, and then you try to figure how to get the data, if and when it exists.

The drawback of the bottom-up approach is that techies are first very busy with getting the data centrally and defining a common data model (hey, I have this data set talk about “customer order” and that data set talk about “client order”…). The outcome may not necessarily reflect business needs, and then it is back to the drawing table. This has been done this way for many years in the BI industry: data comes first.

The top-down approach first looks at business needs: what do we need to know to run our business efficiently and effectively? Next step is to see what data you need to measure your business metrics. Some times you can use point-to-point data integration, and sometimes you will notice that manual entry is more efficient. And more often you will find that you will need to adapt business processes before being able to get the answer you are looking for.

As you notice, I like the top-down approach. It is more flexible as business needs change, and gives results quicker (and most likely against lower costs). It is also in line with (web) trends such as web services, and APIs. Of course, the bottom-up approach is still relevant especially in cases where you need to marry data to be able to in-depth analysis and prediction (for example in case of cross-selling in banks and insurers). But for KPI dashboard, for small and medium sized business, the top-down approach seems the best way forward.

Comments (3)

Thanks for sharing. I may add that when possible, I combine a Top-down approach with the Bottom-Up data available, which makes it useful to draw a Strategy Canvas that can become the starting point of a business development strategy.

Posted almost 10 years ago | permalink
Frank Quintana
Frank Quintana
Sr Consultant at AT&C

Why this bottom-up and Top-down explanation reminds me of the As-Is and To-Be business process?

Posted almost 10 years ago | permalink
Fayaz AK
Fayaz AK
Intern at Span Infotech

Heyi, pretty interesting…If we go for bottom-up, we may get loads of datas, and we may find difficult to get the bussiness out of it..Having KPI’s makes sense…..

Posted almost 10 years ago | permalink

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