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Business Performance Management Dashboards

Originally published October 10, 2005

There is an increasing “buzz” regarding the use of dashboards in many companies. As information systems become more sophisticated, the ability for any size company to have a robust, accurate collection of key performance indicators on a single page is no longer an elusive Holy Grail. Dashboards can now be the primary interface for measuring the success of an organization’s strategy as part of a Business Performance Management (BPM) initiative. However, deployment of dashboards has inherent risks. Our extensive field experience has consistently demonstrated that certain actions are more likely to produce a successful dashboard project outcome. This article is intended to help you focus your efforts and successfully navigate the pitfalls when moving your dashboard initiative forward.

Get a Strong Executive Sponsor

Often, the greatest pitfall for company’s deploying a dashboard initiative involves enrolling executive support. Dashboard initiatives (and BPM initiatives in general) frequently cut across the entire organization. They usually involve multiple departments and various corporate “turfs.” The executive sponsor must buy into the overall initiative, understand the project’s potential benefits, become committed to resolving any differences and keep the project on track. Such support will empower the project team and remove political hurdles, which can quickly burden the team if they are not addressed early.

Create a Team with IT and Line of Business Executives

In many dashboard projects, IT has project management responsibility.  Although this assures that the project follows an established rollout methodology, there is a risk that the project falls short of becoming a strategic performance dashboard. Dashboard projects should be equally split between business process, content (measures) and technology. The team’s senior members must assure that their business units are represented in the discussion. Additionally, they should elevate decisions to executive sponsors if an inter-departmental dispute occurs.

Recognize that Key Performance Indicator (KPI) Selection is a Top-Down Process

While companies often observe their existing metrics and decide which are “key,” this actually should be a top-down process. Business performance management is about executing your strategy. A properly designed dashboard will help you measure that strategic performance. To do this, though, you must start with the strategy. Eventually, a company’s strategy changes for numerous reasons. These changes can be based on the market, the competitive landscape and its own growth stage. Therefore, you cannot use a canned strategy written several years ago.

As part of this initiative, the senior leaders of the group or company need to revisit and share their strategy. Once that is completed, detailed objectives should be given. These objectives are derived from the strategic goals. Once the objectives are understood, the key execution steps for achieving them will become clear. Because of this, the KPIs are the key measures of those execution steps. The metrics provide the supporting detail.

Select Effective KPIs

For KPIs to be effective, they must consider history (even very recent history), trends and predictors of the future. The measures must be both financial and operational. One example of this is a financial measure like monthly revenue growth. Although monthly revenue growth is certainly important, it does not tell you what has already happened. Operational measures should also be considered. Examples of this are product defect rate or customer satisfaction, which work as future indicators. Poor performance on these measures now will likely lead to poor revenue performance later. We typically recommend that a 50/50 balance exists between operational and financial measures. The Balanced Scorecard is one of several available methodologies that help you consider and organize your measures. The Balanced Scorecard approach recommends factoring financial, customer, internal process and learning/growth measures into your overall system.  This often requires some business process re-engineering and takes time to implement properly. A notably high percentage of companies stumble while executing these initiatives.  

Ensure KPIs are Actionable

One of the most important considerations for today’s dashboard is how to make it actionable. There is nothing more frustrating than a room full of executives reading a report that lists flashing red measures, but no one knows what to do about it. You must make sure you are measuring factors that you can impact. In addition, you must have a general action plan and owner in place prior to the KPI falling out of its target range. Another crucial way to ensure actionable KPIs is using products that operate in a portal framework. By doing this, you can view the KPI and can easily move to related applications. These applications can either provide more details or enable you to act on your existing information. Essentially, the more relevant the dashboard is to the user, the more they can utilize it to measure performance. This speaks to creating dashboards by department and/or having the dashboard contents change based on the user profile. Collaboration is important as well. One element of collaboration is being able to interact with other users while viewing the data. For example, the owner of a KPI in the red zone can enter an explanation so everyone can better understand the situation. The more the dashboard embeds processes and workflows related to the way you do business, the easier it will be to learn and use. Clearly, KPIs cannot be actionable if they are not used regularly.

Start Small With Growth In Mind

Initially, you should keep the system small and simple. You can grow with the system as the company embraces it. Think about educating people on how both the company and employees will use this data. If you anticipate any cultural pushback, first give prototypes in a department that will more likely embrace the concept, and then promote its success.

Final Thoughts

Implementation issues are some of the final considerations. You should closely monitor cost estimates and timing expectations when considering technology options. A well-priced, quickly implemented technology solution can do much to balance out your efforts. These efforts will be required in the data and development of strategic measures needing to be done. Similarly, a vendor that offers (or partners with firms that offer) expert consulting around data and KPIs will accelerate your dashboard success.

While dashboard initiatives have their challenges, they provide a value that many of today’s companies recognize. They are becoming an essential element of business management. If you follow some of the guidance provided, you should be able to jumpstart your own initiative and follow a relatively smooth path to dashboard success.

  • Craig SchiffCraig Schiff

    Craig, President and CEO of BPM Partners, is a pioneer in business performance management (BPM). Craig helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

    Craig is a frequent author on BPM topics and monthly columnist for the BeyeNETWORK. He has led several jointly produced webcasts with Business Finance Magazine including "Beyond the Hype: The Truth about BPM Vendors," the three-part vendor review entitled "BPM Xpo" and "BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

    Editor's Note: More articles and resources are available in Craig's BeyeNETWORK Expert Channel. Be sure to visit today!

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