An MBA Intro to Dashboards & KPIs

Adapted from Wikipedia, Charley Kyds Dashboard Reporting with Excel, Stephen Fews blog (www.perceptualedge.com/blog), pointy haired dilbert (Learn Excel & Charting), etc. Table of Contents Digital dashboards Benefits of digital dashboards Types of dashboards Dashboard interface design styles Dashboard history Excel-based digital dashboards Considerations/recommendations when using Excel to create dashboards Key Performance Indicators (KPIs) Examples of KPIs Categorization of KPIs Problems with KPIs Digital dashboards In management information systems, a digital dashboard is an executive information system user interface thats designed to be easy to read. The name comes from the digital dashboard makers aspiration to create a product similar to an automobile dashboard that provides real-time, critical information important for maintaining ongoing operations. Benefits of digital dashboards

Display a wide variety of results or measures (distilled from massive amounts of data) on a single screen. Provide an interface that allows drill-down from high-level to detail information. Can conditionally emphasize specified conditions or trends.

Types of dashboards Digital dashboards are designed to track the flows inherent in the business processes that they monitor. A dashboard may be built to allow a user to view high-level processes and then drill down into low level data. This level of detail is often buried deep within the corporate enterprise and would otherwise be unavailable to the senior executives. Three main types of digital dashboard dominate the market today: Stand alone software applications Web-browser based applications Desktop applications (including dashboards built using Excel) A specialized dashboard can be created to track any one of a companys functions. Function examples include human resources, recruiting, sales,

operations, security, information technology, project management, and customer relationship management. The success of digital dashboard projects often depends on the metrics that are chosen for monitoring. Key performance indicators (KPIs), balanced scorecards, and sales performance figures are some of the elements often used on business dashboards. Dashboard interface design styles Like a car's dashboard (or control panel), a software dashboard provides decision makers with the input necessary to "drive" the business. The dashboards graphical user interface may be designed to display summaries, graphics (e.g., bar charts, pie charts, bullet graphs, "sparklines," etc.). Gauges, initially popular in close imitation of auto and airplane dashboards), have fallen out of favor due to their low content-to-used-space ratio. Fancy effects (3-D, imitated reflections, etc.), decorative elements, etc. that once were popular in jazzing up dashboards (but that provided no useful information) also have fallen out of favor among serious users. Todays dashboard interface design is likely to be as simple as possible. Colors are used sparingly. Labels are succinct. No extraneous elements are included. Links or hot spots provide drill-down capability. The example at left is the Google Analytics Service, a free Google dashboard service that debuted in 2005.

The Google Analytics Service is designed to visually track visits to a website. The illustration above is the first page of tracking information. The page

contains a number of view report links that drill down and display other more detailed dashboard pages (thumbnails below).

At left is a closer view showing how a hotspot on one page (here, the main pages Pageviews item) hyperlinks/drills down to a new pane showing a graphic view of the information. Drill-downs also commonly show more detailed information.

Dashboard history The idea of digital dashboards followed the study of decision support systems in the 1970s. With the surge of web use in the late 1990s, digital dashboards began appearing. Many systems were developed in-house by organizations to consolidate and display data already being gathered in various information systems throughout the organization. In the late 1990s, Microsoft began promoting a concept known as the Digital Nervous System (DNS) and digital dashboards were described as being one component of that concept. At its most basic level, Microsofts Digital Nervous System is a data network and feedback system that mimics the actions of the human central nervous system. Rather than relying on ones mind to make a conscious decision to start and stop every action, the body's central nervous system uses feedback to prompt or initiate action without having to wait for the brain to act. For example, if ones hand touches a flame, the hand moves away instinctively. It doesnt wait for the brain to

study the situation, make an executive decision, and then delegate a move away action to the hand. Similarly, with a DNS a company wouldn't have to rely on central management to initiate and delegate routine tasks. Instead, they would be handled automatically by the system. And, with a DNS a firm could receive automatic feedback that could help with both tactical and strategic decision-making. Excel-based digital dashboards Excel (or some kind of spreadsheet software) is on virtually every businesspersons desk and can be used to create dashboard reports. Below is a tabular Excel report. Is any significant information presented? Its hard to tell without considerable study.

Below is a mock-up of an Excel dashboard version of the report above. The red arrows point to the significant element in the report data: Julys performance is essentially flat (unchanged from June) in all markets. This information is easier to spot when presented as charts in dashboard format.

Considerations/recommendations when using Excel to create dashboards Make charts small and keep them as simple as possible. Use sparklinetype symbols. When displaying multiple charts consider whether or not to use common scaling. Consider using Excel conditional formatting to add an automated interpretive layer to elements of the dashboard. Employ Excel 2007 icon sets where appropriate. For dashboard source data, establish a robust data storage scheme and add newly-generated source data to historical data. External storage tools (like MS Access, OLAP cubes) are logical large-dataquantity repositories and can easily share data with Excel. For re-usable/update-able dashboards, set aside a work area (a control worksheet) to hold key dashboard variables (such as reporting period, units, currency symbol, scaling) that control the dashboard. For example:

For

easier maintenance (clarify, flexibility) consider giving each figure (chart, table, etc.) in a dashboard its own source worksheet in the Excel dashboard workbook.

Consider creating a custom theme color set (Page Layout, Themes, Themes). Consider mock-up/placement techniques for dashboard elements that make use of Excel row/column height/width adjustments and the spreadsheet grid.

Key Performance Indicators Digital dashboards are often built using performance indicators, sometimes known as key performance indicators (KPIs). A KPI is a measure of performance commonly used to help an organization define and evaluate how successful it is, typically in terms of making progress towards its longterm organizational goals. The KPIs for an organization can be determined by finding out whats really important to different stakeholders in that organization. KPIs differ depending on the nature of the organization and the organization's strategy. A KPI is a key part of a measurable objective, which is made up of a direction, KPI, benchmark, target, and time frame. For example:

Increase Average Revenue per Customer from 10 to 15 by EOY 2012.

In this case, 'Average Revenue per Customer' is the KPI. Examples of KPIs For Marketing Number of new customers acquired Demographic analysis of potential customersStatus of existing customers Customer attrition Revenue generated by different customer segments

Outstanding balances held by segments of customers Collection of bad debts within customer relationships. For Manufacturing Overall equipment effectiveness Cycle time (total time from the beginning to the end of a process) Cycle Time Ratio (CTR = StandardCycleTime / RealCycleTime) Utilization Rejection rate For Supply Chain Management Sales forecasts Inventory Procurement and suppliers Warehousing Transportation Categorization of KPIs

Quantitative indicators that can be presented as a number.

Practical indicators that interface with existing company processes.

Directional indicators specifying up or down trends. Actionable indicators that can be used to effect change. Financial indicators used in performance measurement.

Problems with KPIs In practice, overseeing Key Performance Indicators can prove expensive and/or difficult. Some KPIs, such as a KPI intended to measure staff morale, may be impossible to quantify. Once a KPI is created, it may become difficult to adjust it to changing needs without losing important historical comparisons. Conversely, a dubious KPI may be created because historical data isnt available. A KPI based only on in-house practices may make it difficult for an organization to properly compare itself with similar organizations. Realistically, a KPI should be recognized as a rough guide rather than a precise benchmark.

12-2009