Key performance indicator (KPI)
A measurable value chosen to show whether a system, process or business is achieving its objective, computed from underlying data on a regular basis.
IoT exists to move KPIs, not to collect data for its own sake. A connected machine feeds OEE; a smart building reports energy per square meter; a logistics fleet tracks on-time deliveries and idle hours. Defining the KPI first tells you which sensors, sampling rate and processing you actually need, and which are nice to have.
The subtlety is that a KPI is a derived number, and the derivation must be precise. “Uptime” can mean powered, connected or producing; “energy use” can include or exclude standby. Documenting the formula and the data it uses, then showing it consistently on the dashboard, prevents arguments later and is the basis for demonstrating return on investment.
Part of the IoT Glossary. Spotted an error or a missing term? Tell us.