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Shaku AtreThe Performance Dashboard: The New Face of Business Intelligence

by Shaku Atre

May 2011

 

To stay competitive, organizations need business intelligence – accurate, actionable information about key business metrics -- more than ever.

A performance dashboard, the user interface ,providing summaries and reports of the most critical information which is called business intelligence delivers the most business value when used to manage progress towards operational, tactical and then strategic goals based on Key Performance Indicators (KPIs).

Creating an effective performance management dashboard with the proper mix of pictures, photos, diagrams, graphs and charts requires business, technical and political skills. It is an ongoing process of understanding the changing needs of the users that will be served, the information that is most critical to them and the presentation methods that are most effective.

Organizations need dashboards because everyone from senior management to “front-line” employees are inundated with data in the form of reports, memos, emails and phone calls, among other electronic and non-electronic formats. This data needs to be synthesized into the critical information that will enable them to make decisions, take actions or delegate work in a timely way. While many “dashboards” are only digital versions of paper reports, an effective dashboard dynamically combines information in new ways to measure performance (where appropriate in real-time, such as in stock trading or the condition of Intensive Care Unit patients) and enable fast, appropriate action by decision makers , whether in management or the “trenches” .

What Makes an Effective Dashboard?

Presenting the right information, to the right people, at the right time, in the right presentation format and at the right cost make a performance dashboard successful. If a dashboard is not easy, or even enjoyable, to work with, users will abandon it. But if it is only pleasing to look at and doesn’t give users the information they need to make timely decisions they will also abandon it. Decision-makers must find the dashboard easier than relying on less accurate ad-hoc reports or the corporate grapevine. Ideally, a dashboard should encourage not only its use but interactivity. When a decision maker creates new views of data or share ideas with other dashboard users, they help assure that problems are detected and resolved in the most appropriate timeframe at the right cost.

An effective dashboard allows users to change the type of information they see, or how it is displayed, without help from IT as business challenges evolve. For example, during a downturn a user might need to track KPIs focused on cost-cutting. When the economy improves, those KPIs might shift to market share or increased sales. With the acquisition of another company, a user might suddenly need to track the performance of new product lines, or merged product lines, or sales in a new geography. Most importantly, an effective performance dashboard must clearly and quickly alert decision makers when they need to take action, such as if customer retention falls in a specific region or defect rates rise on a certain production line.

Finally, a performance dashboard must increase both the speed and accuracy with which managers make decisions. This requires that accurate data can be quickly found and extracted from operational data stores.

Major Types of Dashboards

There are three major types of performance dashboards, each with different requirements for level of summary, analytic capabilities and user interfaces.

The first, and most numerous, type of dashboard is the operational dashboard. These are usually deployed at the departmental level to monitor the processes that generate products or services. They need to provide as much detailed data as possible, reducing the need for ‘drill downs” because they are used by employees in the ‘trenches” who don’t have time to analyze a situation and often have the experience to solve problems without further study. For example, if a delivery route is hit with an unexpected blizzard dispatchers have to redirect trucks instantly to keep deliveries on schedule. For a manufacturing firm, an operational dashboard might track products manufactured along with the number of defects, complaints or returns. For retail, it might track daily revenue or sales based on product placement to make the best use of valuable shelf space.
The second, and somewhat less numerous, type of dashboard is a tactical dashboard, which monitors the processes that support the organization’s strategic initiatives. A tactical dashboard falls between the strategic and operational dashboards in the level of detail at which the data is presented. If, for example, an organization wants to grow worldwide market share by 15 percentage points in a year, a tactical dashboard will track overall actual vs. target market share in various geographies, while the operational dashboard would track sales of specific products against their competitors at different times throughout the year. A tactical dashboard thus requires greater “drill down” capabilities than an operational dashboard because it presents information in a more summarized form. The interface tends to be more graphical than that of an operational dashboard, and very clearly tracks performance of the KPIs.

The third type, a strategic dashboard, measures progress towards enterprise-wide strategic goals. It might include non-financial KPIs such as customer satisfaction, customer attrition or market share (as well as comparisons such as this year’s fourth quarter sales vs. the same quarter in prior years) along with financial KPIs such as profitability and lifetime value per customer. Since a strategic dashboard presents highly summarized global trends for top management, it must provide greater abilities to drill into the underlying data. It also requires less frequent updates from supporting databases. Along with internal operational and tactical trends, it is also more likely to include data on global, external trends (such as the market share or projected profit margins of competitors, currency fluctuations or legal or regulatory trends where applicable for industries such as pharmaceuticals. It may also include information about external events such as political unrest that might have an impact on the strategic goals and require action by top management.)

Ongoing Effort

The relationship among the three types of dashboards can be represented as an upside-down, hierarchical tree structure with strategic dashboards at the top, major branches made up of tactical dashboards growing down from the strategic dashboard and smaller branches and leaves of operational dashboards hanging from the major branches.

Keeping a dashboard effective over time may require changing everything from the type of data presented, the level of detail at which it is presented, the presentation format or even the KPIs themselves if feedback from the operational and tactical dashboards shows that the KPIs set in the strategic dashboards are unrealistic.

Rule of Thumb: Identify early on which type of dashboards you need, because each has very different requirements for data, user interfaces and reporting. Your dashboard project will involve a learning curve as you continually iterate through three steps:

  • Step #1: Study the user requirements at all levels;
  • Step #2: Plan and implement a dashboard with user input, with prototypes if one can afford the expense
  • Step #3: Learn and improve

Summary

Dashboards put a new face on traditional business intelligence by providing timely actionable information in the form of easily understandable diagrams, pictures, charts and signals rather than the columns of numbers found in traditional reports. Their purpose is to identify whether the organization is meeting, exceeding or falling short of the key performance indicators that drive business success. The presentation must be simple, clear and easy to use, and the dashboard must be flexible enough to change as business needs evolve.

Shaku Atre è una speaker eccezionale che ha la reputazione di catturare l’attenzione dei partecipanti e di mantenere vivo l’interesse anche in presenza di argomenti complessi. E’ presidente di Atre Group, Inc. una società di consulenza, training e publishing nel settore della Business Intelligence. E’ stata Partner in Price Waterhouse e 14 anni in IBM. E’ una esperta rinomata nei settori del Database Management e del Data Warehousing. Ha tenuto seminari su questi temi in USA, Canada, Europa, Asia e Sud America. I suoi articoli sono frequentemente pubblicati in Computerworld, Information Week, Information Management, Tech Web e altre importanti pubblicazioni di computer. Ha scritto numerosi libri fra i quali ricordiamo il best seller “Database: Structured Techniques for Design, Performance and Management” pubblicato da John Wiley and Sons, che ha venduto più di 250.000 copie ed è stato adottato da molte importanti Università tra cui Harvard, Columbia, Cornell, MIT, New York University, Stanford and U.C. Berkeley. Altri libri “Information Center: Strategies and Case Studies”, "Database Management Systems”, “Distributed Databases, Cooperative Processing & Networking” ed inoltre “Atre’s Roadmap for Data Warehouse/Data Mart Implementation” pubblicato da Gartner Group. L’ultimo libro pubblicato è “Business Intelligence Roadmap: The Complete Project Lifecycle for Decision-Support Applications”.

This article is based on a two-day seminar Ms. Atre will present for Technology Transfer in Rome, Italy April 13-14th, 2011 providing a complete guide for planning, designing, implementing, using, and maintaining performance dashboards. Meant for business managers and IT specialists, it will walk attendees through detailed role-playing exercises and equip them to deploy dashboards when they return to their organizations.