What is a KPI? In simple terms it’s what is key for your organisation to work on to be successful. This contrasts with a Performance Indicator (PI) that is something useful to measure.
What makes it key? Think about the things you can measure and consider this example. You look at story cycle time in your Scrum, it takes 19 days to complete a story but your Scrum is 10 days long. You decide you want to release working software every two weeks to live. Oh dear! Your stories are late and run into your next sprint. Let’s make the story cycle time a KPI.
I could measure and improve all manor of things to help succeed at this KPI, what if the story cycle time was affected by code quality which caused defects, poor acceptance criteria, infrequent software deployment etc. etc. Improving these items may help you to improve. Chose your KPI’s carefully and limit to under 10. Too many and it’ll be hard to see what matters.