Corporate Dashboards -
Real ROI, or just the “Next-Big-Software-Thing”
By Michael MacDonald
Every 18 months or so, information technology industry analysts and vendors busily engage in hyping the “Next-Big-Software-Thing™” (N.B.S.T.) for managing businesses. Analysts write all kinds of articles trumpeting the benefits; vendors come to market with new products; the technical press writes thousands of pages on the topic. Tradeshows with knowledgeable speakers, outrageous displays and clever tchotchkies complete the picture of an up and coming technology that’s avoided only at your business’s peril.
Today’s N.B.S.T. is Corporate Dashboards. Are they just more of the same recycled Business Intelligence (BI) hype or do they produce real value? How much do they cost? Are they worth the money?
Ah, but I’m getting ahead of myself…
Corporate Dashboards Defined
To the uninitiated, a Corporate Dashboard is a comprehensive summary of operational business metrics. That is, it centralizes a business’s information systems from Finance, Human Resources, Sales, etc, to give executives and appropriate employees a tactical view of the company’s (and individual’s) performance.
NOTE: They are not cute replicas of car or airplane consoles so you can “drive your business” or “adjust the corporate trim.”
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Example of a corporate dashboard to monitor sales performance. |
Key features of most corporate dashboards:
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Example of a Key Performance Indicator (KPI): Pareto Chart showing Top Ten Products |
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Some examples of business charts, including standard and more exotic types. |
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Examples of a KPI showing goals vs. actual vs. forecast in the table above the gauge. |
A corporate dashboard can be built incrementally. A good dashboard should start small, with the most relevant metrics, and be augmented as time goes on. This helps prevent runaway development costs and allows each organization to focus on measures that are important to them.
Why A Dashboard?
So now that we know “what” a corporate dashboard is, the next question is, “Why do I need one?”
There isn’t much argument on the usefulness of relevant, up-to-date, business information. Most executives know the phrase, “you can’t manage what you can’t measure,” and most organizations have some kind of business monitoring already.
Having your business’s metrics at your fingertips 24/7, 365 days a year, provides you with insights for managing organizations large or small. Adding corporate goals to contrast with the reported actuals results in instant accountability – people are held to standards; the goals are revealed to be attainable or not before it’s too late to change course. Securely exposing dashboards across the organization, so that many levels can compare their performance against objectives, results in a system that quickly and consistently conveys corporate goals, unfiltered, across the enterprise.
Unfortunately, contemporary business reporting has many problems. In midsize and smaller companies, business measurement is done mostly via Byzantine collections of manually updated spreadsheets. These spreadsheets are costly to maintain, primarily only show textual data, the keying-in of data is error prone, and multiple versions of the “same” data can be dramatically different. In larger companies, the need for better information has driven development of expensive and complex business scorecarding and On-Line Analytical Processing (OLAP) software applications. While usually effective, these systems can be overwhelmingly expensive to implement.
The technology driving the push toward corporate dashboards has been developed to avoid the pitfalls seen in so many other corporate information systems. They can integrate more easily, they were written from scratch to be Internet/intranet-based (instead of a rehash of old client-server applications), and they add the key feature of integrating goal information.
So why use dashboards? They save lives. (Well, some of them do anyways).
One example of an effective dashboard implementation is the US Air Force’s Medical Service (AFMS) dashboard. The AFMS provides service members and their dependents with medical services at over 80 health clinics worldwide. Unfortunately, such a far flung organization exacerbates an already tough management task. Prior to the dashboard implementation, the national and regional managers had trouble determining if their immunization, health testing, and customer-service goals were being met.
To develop their dashboard, they started small – they first worked out what would be the most effective metrics; they researched and implemented a data infrastructure to support the dashboard; then they built the dashboard incrementally. Month after month they added new KPI’s and refined existing ones. The charts are rather plain but effectively communicate the metric and whether or not it is “Good”, “OK”, or “Needs Immediate Attention.”
that they’ve fully incorporated the dashboard into their management system. Once a month, the national and regional managers hold a videoconference to discuss their respective units. The dashboard plainly shows which units are achieving their goals and which are not. Those with the best results share how they got there, those with substandard results are called to account.
The AFMS dashboard system has literally been credited with saving lives through improving preventative health testing worldwide. See the AFMS dashboard (once you are on the AFMS site, click on the "Go" button at top right of home page to generate a dashboard).
The True Cost of Dashboard Implementation
When executives read glowing testimonials (like mine above) from the technical press and receive slick marketing and sales pitches from the vendors, it is hard to not want your own dashboard – the benefits are obvious. But implementing a dashboard is rarely as simple as a demo or testimonial would suggest.
So what does a dashboard cost?
Typically dashboard software expenses run between a few thousand dollars to well over a million. But beware – the cost of the dashboard software is rarely equivalent to the cost of a working dashboard implementation. The real costs come from customization and a solid data infrastructure.
In most businesses, there is no “one-size-fits-all” when it comes to displaying corporate metrics. Each company, even individual executives, measure themselves with KPI’s of particular interest to them. A certain amount of customization is required, no matter which software package you buy.
The more important, and usually misunderstood, factor that drives up dashboard implementation costs is the state of the data infrastructure. Building a dashboard without a solid data infrastructure is like building a dream house in the middle of the Sahara desert with no roads, electrical hookup or water supply. The house may be gorgeous and equipped with a pool, hot tub, and big screen TV, but its value is diminished by the lack of infrastructure around it.
To explain further, having an established data infrastructure means that the metric data and goals for the defined KPI’s are both available and in the correct form for presentation.
Consider a simple KPI that shows a company’s average customer satisfaction rating. Even a simple gauge, like the one below, requires four unique data items. The first is the computed average of the customer satisfaction ratings displayed as the “hand” value. The remaining elements are used to color the sectors and can be described as the goal (100), good (80), and bad (30).
Simple dial chart showing average customer satisfaction.
Note that color bands give immediate indication of performance.
While this example may appear simple, if the data are not already available, an investment in the data infrastructure will be needed.
Summary
Some months ago, on an online technology forum, I saw a hopeful soul asking about corporate dashboards. She said (somewhat paraphrased): “I have a million bucks to buy an executive dashboard, who should I buy from?”
After my initial reaction of blurting out “ME!”, I thought about it some - A million dollars. That’s a decent size line item expense, even for large companies. I wondered, “Who authorized that? Does that mean the knowledge gained from having the dashboard will translate into an ROI of at least a million dollars? (A dashboard that helps save lives would certainly be worth a million dollars.) Do they even know what they want to see? Is the data infrastructure there? How will it be used? Did some executive say, ‘Smithers! I need a page with some gauges! Here’s a million dollars, make it happen!’?”
Executives considering a dashboard implementation should press on – there’s clear value and ROI in an effective dashboard. I would, however, caution you to:
a) make sure to understand the entire cost of implementation;
b) insist on an incremental approach with deployable milestones;
c) figure out a way to make the dashboard part of an ongoing management process.
Finally, this Next-Big-Software-Thing of corporate dashboards is not a dramatic departure from business intelligence and decision support tools of the past – it’s an evolution, not a revolution. But the technology convergence over the last few years of integrated data centers with instantaneous graphics and web-based deployment means that they are far more likely to succeed than ever before.
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About the Author:
Michael MacDonald is a Founder of Visual Mining, Inc. and has extensive experience in software design, development, and implementation, specializing in information graphics and Graphical User Interface applications. Recognizing the need for easy-to-implement dynamic graphics as well as the corporate support for the Java standard from Netscape and Sun Microsystems, he correctly assessed the value of a dynamic web-based graphics solution, and the need to supply chart components for developers and HTML authors.
Before starting Visual Mining, Mr. MacDonald's work was incorporated in several large-scale software applications from AT&T, Intersolv, Hewlett-Packard, Tracor, and Shiva Corporation, as well as numerous applications within the US government and military.
In 1995, Mr. MacDonald started MJS Consulting, a computer services organization providing software support to government and Fortune 500 companies, including Sun Microsystems, Fannie Mae, National Security Agency, Central Intelligence Agency and several others. He has also worked for Rapid Systems Solutions Inc, Tracor Aerospace ISD and the National Security Agency as a senior research intelligence analyst.
