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How’s Business? Ask Your Dashboard
by Shaku Atre
Today’s business world is increasingly a data-driven one. Organizations in all industries are striving to turn their volumes of data into information they can use to make insightful, profitable decisions.
But it is not enough to simply provide people with information; in today’s highly competitive world, businesses need not just "information" but "actionable information." And they need this actionable information delivered to the right people, at the right time and at the right cost -- this is the fundamental premise of business intelligence.
Consider the many reports that users receive. In many cases, it’s difficult to distinguish which metrics matter and which don’t, as well as which are most critical. Often, the problem is that the metrics are not clearly communicated.
This is where effective dashboards come in. A dashboard is an interface that presents information in an easy-to-understand and easy-to-relate, often graphical way, providing users with a lot of meaningful information at a glance. Dashboards can be an incredibly valuable and empowering tool for understanding critical business data in the metrics. The metrics used in the dashboard vary by industry and business function, as well as by the type of decision-maker and level of skill and tools used. They can be used for many functions, including planning, resource allocation, budgeting/forecasting, reporting, monitoring, and analyzing as well as strategy setting.
Dashboards are made up of two main components:
Key performance indicators: An enterprise performance scorecard (see below) and dashboard are based on meaningful and well-defined KPIs, which show whether an organization is meeting its stated objectives. They apply to the performance of the organization as a whole, so if there are multiple divisions, each division may need its own scorecard and dashboard.
KPIs can be financial, customer oriented, internal process and employee-related. Many KPIs are interrelated, such as debt to equity ratio, asset turnover, and profit margin.
Scorecards: A scorecard is a set of metrics (or KPIs) that presents current performance data for a business process or for a strategic goal towards a target value. These indicators direct the business on key tactical objectives and goals. This will ultimately shape the vision and strategy for the organization for that particular time period.
Challenges and Pitfalls
There are many potential challenges to implementing scorecards and KPIs. Dashboard implementations are considered faulty if the following conditions exist:
• Data has to be entered manually or “refreshing” the data proves very time consuming.
• Calculating and/or aggregating data is tedious.
• The user has to navigate multiple tools in order to answer a question.
• The dashboard design is poor (not user-friendly).
• Multiple logins are required to get to the right dashboard.
• It needs an extensive amount of user training. The software tool has to be intuitive, resulting into almost zero necessary training.
• It lacks executive sponsorship and funding.
• The user must wait 10 seconds or longer to retrieve information.
Types of Dashboards
There are several different types of dashboards, including strategic, tactical and operational.
Strategic dashboards can reflect enterprise-wide strategic goals, as well as corresponding KPIs. Features include global, external trends and growth measures, all of which are related to or based on the Balanced Scorecard Methodology. The data is highly summarized and presented graphically; with details available via drill-down capabilities.
Tactical (also called analytical) dashboards measure business progress in accordance with each strategic initiative. Progress is measured against a preset goal, such as a budget or target. Drilldowns reveal details and break down data for analysis. For example, they help determine why certain targets were not met and where a potential problem might be.
Operational dashboards monitor specific business processes, such as order processing and shipping. They are mainly used at the departmental level, where operations take place. Updates are tracked daily or weekly using real-time charts and reports, and detailed data is presented, with strong analytical functionality in order to perform a root-cause analysis.
The ideal placement of the dashboard is the enterprise portal, because this is the central point from which organizations can distribute various BI applications. The portal enables everyone to access their dashboards, documents, presentations, online discussions and other applications from a single location. Additionally, it’s a place for users to discuss observations and propose ideas and potential solutions. Publish the dashboard on cloud servers so it’s instantly accessible to a vast number of people at any time.
To properly implement a dashboard, it is important to enlist proven project management practices. Like any major project, there are both people and technology issues, and the people issues need to come first.
• Choose an experienced sponsor and ensure funding is approved.
• Identify key users and determine their expectations and needs.
• Gather an implementation team that will cover functions such as project management, business analysis, integration expertise, data warehouse expertise and metrics development, including KPIs and scorecards.
• Determine which data sources will be used for each dashboard.
• Identify main KPIs used in the dashboard.
• Determine how often the dashboard needs to be updated.
• Identify needed hardware and software.
• Determine whether a screen designer needs to be assigned to aesthetically organize the dashboard for details such as color selection and placement of charts and diagrams.
Dos and Don’ts of Effective Dashboards
Just because you have a dashboard doesn’t mean it’s an effective one. Here are some tips to create a dashboard that conveys actionable information to users.
• Know your audience and their interests: Determine which questions your dashboard will answer and for whom these answers are pertinent. Also, consider the variety of devices (laptop, mobile devices) through which to deliver the dashboard and what will be most accessible and useful to the greatest number of people.
• Develop accurate and consistent dashboards: Minimize data redundancy. Most inaccuracy and inconsistency is due to redundantly stored data.
• Have up-to-date data as required: Not all data is produced or updated in real time. It is important to know what data is current and still relevant to the needs of your audience.
• Make the dashboard easy to read: Don’t clutter the screen. Instead, draw attention to the core content and provide space for the audience to send questions or comments.
• Identify critical metrics (with critical KPIs): Determine which metrics are most pertinent to users and provide drill-down capabilities for lower level details.
• Think “dynamic”: Make the dashboard as interactive as possible, and make it easy to create content on an ad hoc basis.
• Provide a customizable dashboard interface: Business users should be able to easily customize their dashboards without any assistance from IT.
• Provide a printable dashboard: Most senior managers still want to see a hard copy.
• Extend the dashboard beyond one page or screen: The dashboard should present the most important results on a single page. This will make the material more understandable, and, as a result, the information is more actionable.
• Present data that is dependent on other data: All data should be fully comprehensive; additional explanations should not be needed to understand it.
• Provide only one level of data: It’s important to present multiple layers of data, with the ability to drill down at least two to three levels.
• Present metrics in a vacuum: There should be context in which to provide valuable insight into the presented data (for instance, high number of house foreclosures in the context of the collapsed real estate market, or quarterly comparisons for financial results). Use KPIs, goals, benchmarks or even some time series results to give relatable context.
• Expect your first dashboard to be your finest: Build and learn. Use software tools that enable you to make changes easily as you build your first dashboard.
• Don’t try to answer every question with one dashboard: A dashboard should not be a catchall. You may consider building a number of dashboards, with various focal points.
• Don’t have too many metrics: Too many metrics will defeat the purpose of the dashboard because you won’t see the trees through the forest.
In today's business world, data and data-driven decision-making are essential for survival. With these tips, you can implement an effective dashboard that will launch your organization into making better decisions to reach its strategic goals. When a dashboard is designed, and implemented correctly, it can be considered the new face of BI.