The current economy has united companies large and small with a common objective - to do more with less. Getting more out of business data is one of the coping strategies being employed to extract better information from the terabytes of data flowing through an enterprise.
In today’s enterprise, data is stored across many applications and databases, each with a specific business role. Defining the metrics that matter and providing a relevant, compelling view of the data for users within the business, is generally the first hurdle in the adoption and communication of key performance indicators (KPIs) .
Making operational data pervasive across an organization is also a powerful tool for mapping performance against corporate goals and key performance indicators that have been agreed by management and communicated to all employees. Having “right time” information available to departments and individuals empowers them to act on this information in relation to corporate or departmental goals. Yet a clear definition of what KPIs are important, and how to represent them, is still perceived as one of the major challenges of implementing dashboards.
A Dashboard is the one application that can be designed to filter out unwanted information to ensure appropriate KPIs are front of mind and relevant to their intended audience. The ROI of a Dashboard application is compelling. It can be used to connect to multiple data sources and provide visibility to users by presenting the information in a format that is timely, meaningful and actionable. Dashboards also allow users to search, drill down and even update the presented information - saving time, streamlining workflow, maintaining the accuracy of records and focusing user’s actions on the positive outcome of key metrics.
There are thousands of KPIs that can be viewed online. Some are listed by industry vertical, others by functional horizontal. It can be tempting to take the path of least resistance and try to adopt KPIs off the shelf, and they may work for you initially, but below are some guideline to consider when developing KPIs that will be relevant to your business over the long term.
KPI & dashboards - The 10 Guidelines
- Make sure they are important and related to the business - KPIs should be linked to strategic goals and be supported from the executive level through to departmental managers and individual employees. The KPIs have to drive the desired behaviour at the department and individual levels. Keep in mind KPIs are not only internally focused, but may be customer driven.
- Make them actionable - Ensure that there is an owner that is accountable for each indicator who has the authority and necessary support to effect change or minimise impact. Establish accountability at the definition phase. It is not a good KPI if you are unable to take corrective action on one of your chosen KPIs.
- They should be measured frequently - The frequency will vary on the KPI and may range from constantly, hourly, daily through to weekly monthly or even quarterly. KPIs that are only reviewed every month or quarter may be strategically important but are less critical to operational success.
- Make them relevant to their audience - A dashboard provides relevance to its audience. Each department or individual should be provided with a view of the KPIs most relevant to their goals to focus their attention on what is most important for their jobs.
Keep dashboards simple, easy to interpret - Visual communication experts like Stephen Few have written extensively on how to properly design reports, charts, and graphs for quick and accurate consumption. Today, dashboard application have a myriad of visualisation options. It’s tempting, to get carried away with impressive graphical data, maps, speedometers etc. to represent performance against metrics “Hollywood style”. However, key information should be self evident and visible at all times so that exceptions can be seen and acted upon.
Dashboards should be kept simple so it is easy to interpret where attention is needed.
- Provide context - Tracking actual performance against goals or historical averages gives insight to users and enables better decision management. The ability to alert users visually and provide drill-down views into the data provides insight and context on what corrective action may be required.
- Education & communication - It is not enough to identify and provide visibility of KPIs. Users at all levels have to understand how they align with individual, departmental and strategic goals. Include education on the use of the dashboard application, the importance of the KPIs and how they align with strategic goals to new employees as part of the induction process.
- The “K” in KPI stands for Key - It is important to determine if defined KPIs are really relevant to meeting strategic goals. All to often dashboards will adopt a if you can measure it, you should measure it approach where you end up looking at 20 or more competing KPIs. Are they the right metrics? Are there too many?
- Return on investment - Following definition, ongoing measurement of KPIs can be a barrier to adoption if it is viewed as a time consuming manual process, the information is not trusted or readily available. KPI Dashboards automate the process; they enable business information to be acted upon and can be integrated into the workflow process, saving time. Improved decision making based on right time information rather than gut feel increases the productivity of individuals and departments.
- Scope of deployment - Small pilot deployments should be used to work through definition, presentation and measurement of the selected KPI’s. Users will be advocates for adoption if they can see how the information improves their contribution to the strategic goals. Incremental steps, done really really well.
About the author
Terry Brown is the Director of Marketing at Klipfolio Inc., an Ottawa enterprise dashboard software vendor that helps accelerate business decision-making through real-time awareness of key performance metrics. He can be reached at firstname.lastname@example.org or Twitter: @terryalanbrown
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