---
title: Key Performance Indicator (KPI): Definition and Uses | Aavenir
url: https://aavenir.com/glossary/key-performance-indicator-kpi/
description: A key performance indicator is a measurable value that shows how well an organization, team or process is progressing toward an important goal, and where to focus.
updated: 2026-11-07
---

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# What is a key performance indicator (KPI)?

A key performance indicator is a measurable value that shows how well an organization, team or process is progressing toward an important goal, and where to focus.

## How key performance indicators work

A key performance indicator links a goal to a number you can track. Organizations use them at several levels: high level measures follow overall business performance, while lower level measures follow a department, process or supplier. Good indicators are specific, measurable, owned by someone and tied to a target and a time frame. They give an analytical base for decisions and keep attention on what matters most.

## Examples in procurement and contracts

- Share of spend under contract

- Savings achieved against target

- Cycle time from request to signed contract

- Supplier on time delivery and quality

- Invoices paid on time and first time match rate

- Obligations met on schedule

Measures like these often appear on a [dashboard](https://aavenir.com/glossary/dashboard/) and in supplier scorecards.

## How Aavenir handles it

Aavenir records the events behind these measures: contract stages in [Contractflow](https://aavenir.com/solutions/enterprise-contract-management-software/), obligations and evidence in [Obligationflow](https://aavenir.com/solutions/contract-obligation-management-software/) and invoice matches in Invoiceflow. On ServiceNow, teams report on them with the platform's own tools.

## Choosing good indicators

Start from the goal and ask what would show progress toward it. Prefer measures the team can influence, define exactly how each is calculated, set a target and review on a fixed schedule.

## Keep reading

[Dashboard A dashboard is a visual display that tracks key performance indicators and metrics in one place, so people can see at a glance how a business or process is doing. Read more](https://aavenir.com/glossary/dashboard/)[Procurement analytics Procurement analytics is gathering, classifying and analyzing purchasing data from many sources to produce insights that improve sourcing, suppliers and spend. Read more](https://aavenir.com/glossary/procurement-analytics/)[Provider performance management Provider performance management is how healthcare organizations measure and manage the providers they contract with, against quality, cost and contract terms. Read more](https://aavenir.com/glossary/provider-performance-management/)

Frequently asked questions (FAQ)

## Common questions

###

### What is the difference between a key performance indicator and a metric?

Every key performance indicator is a metric, but not every metric is key. An indicator is tied to an important goal and a target, while other metrics simply describe activity. [Read about dashboards](https://aavenir.com/glossary/dashboard/).

###

### How many key performance indicators should a team track?

Few enough that each one gets attention and drives action. Too many measures hide the ones that matter. Review them regularly and retire the ones nobody acts on. [Read about procurement analytics](https://aavenir.com/glossary/procurement-analytics/).

###

### Can contracts include key performance indicators?

Yes. Service contracts often set performance indicators with targets and remedies, such as service credits. Tracking them as obligations makes sure they are measured and enforced. [See Obligationflow](https://aavenir.com/solutions/contract-obligation-management-software/).

Have a question we have not answered? [Ask the Expert](https://aavenir.com/contact/)

Schedule a demo

## See your contracts run on one record.

- **1****A 30 minute walkthrough**Built around your team, whether that is procurement, legal, IT or finance.

- **2****Your contracts, not ours**Bring a few sample agreements and watch Aavenir AI extract and review them.

- **3****ServiceNow or standalone**We show the deployment that fits the systems you already run.

Prefer to talk first? [Contact the team](https://aavenir.com/contact/).

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