This data, especially in small businesses, is largely untapped for the additional insight it could offer. But today the tools for capturing and understanding it via dashboards and scorecards are affordable and available to everyone.
A car’s dashboard gives the driver a view of what’s going on under the hood via instruments, gauges and “idiot lights.” These practical indicators are designed to give the maximum amount of information at a glance to alert the driver when an inconsistency occurs. Just as you would be skeptical of driving a car without a functioning dashboard, I think you will soon be considered crazy to drive your business without one as well.
Dashboards provide summarized data from business information systems so that owners, managers and employees can get a quick reading of key performance indicators for their organization”s activities.
At Lancet Software, we’ve coined and trademarked the phrase Return on Data to emphasize the importance of this business process. Dashboards present information that is updated more frequently than those end-of-the-month financials – often daily or in near real-time.
The indicators can be in the form of speedometers, gauges, traffic lights or other graphical representations, and are often color-coded to provide red, yellow and green alerts as metrics vary from predetermined thresholds.
Dashboard tools are becoming more readily available from business intelligence companies, but it often takes an expert to develop specialized dashboards that meet a company’s specific requirements.
What’s a dashboard?
There are many different types of business dashboards or scorecards . Each can look and function somewhat differently, and often are identified by different names depending on the organization implementing them. To dispel the confusion, Wayne Eckerson of the Data Warehousing Institute (www.tdwi.org) and author of Performance Dashboards: Measuring, Monitoring, and Managing Your Business, defines dashboards and scorecards as:
Multilayered performance management systems that enable organizations to measure, monitor, and manage business activity using both financial and non-financial measures.
Dashboards and scorecards provide more than just a screen populated with fancy performance graphics: they are full-fledged business information systems designed to help organizations achieve strategic objectives. They help measure the past, monitor the present, and forecast the future, allowing an organization to adjust its strategy and tactics in real time to optimize performance.
When properly deployed, dashboard and scorecard systems offer some big benefits:
Communicate the company’s strategy. Dashboards provide you with the power to continuously communicate your vision and objectives to your organization. The best dashboard tools allow the business to adapt, or personalize, performance measurements for each viewer based on his or her role and level in the organization. As an agent of organizational change, dashboards make it possible for leaders to align their organization toward the big picture goals.
Analyze company performance. Just like a car’s dashboard, the software version delivers key business performance information at a glance using graphics. A well-built system should highlight unusual, serious or exceptional conditions clearly. The best will allow viewers to “drill down” to more detailed data to find out the “why” and “how” of an alerting condition.
Continuously monitor execution. Dashboards and scorecards permit owners and managers to monitor ongoing execution of the business priorities, strategies and plans. As long as data is flowing into the systems and being aggregated by the dashboarding tools, these performance management systems enable executives and managers to identify and address critical problems undermining progress before it’s too late to fix them.
Maximizing return
While dashboard technology is relatively new, there are a number of vendors that have brought tools to market, either as stand-alone products or as part of a suite of reporting tools. Dashboards by their nature require a number of different technologies:
Access to data. You must have connections to the data that will be displayed. That data needs to be clean, accurate and available in a timely manner. This is typically the biggest hurdle in creating an effective dashboard.
Remember that the value of a dashboard or scorecard increases if the data is recent. While dashboards that are available only after the books are closed can be useful, the faster the data gets to the dashboard, the more the company can strategically drive forward using the dashboard.
Imagine how a speedometer that only updates every 10 minutes would not be as useful as one that displays your speed in real-time. Near real-time systems allow for quick reactions to trends and the ability to be more proactive as issues or opportunities develop.
Plan for expansion (because the bases. If you are not careful, response times will plummet and your hard-won reputation will suffer irreparable damage.
Create usable performance measures. The old saying, “what gets measured, gets done,” is true. Well thought-out measurements are the key to a viable dashboard. Good measures must link performance of individuals and departments to the overall corporate strategy. While the design of these measures is beyond the scope of this article, it’s important to develop measures with the full buy-in of those being measured.
Small businesses are often reluctant to make technology investments, unlike their larger counterparts. Business success and maturity rely on putting systems and tools in place that can scale up as a business grows.
Implementing a dashboard and the information technology infrastructure required to make it work lays the groundwork for the future. Preparing for your company’s next stage requires an investment and the discipline around defining goals, then measuring and monitoring those goals can set a business up for long-term success.
Thomas Niccum
Lancet Software
952.230.7360
tniccum@lancetsoftware.com
www.lancetsoftware.com
