Before diving into an explanation of dashboards, it is important to have a fundamental understanding of business intelligence (BI). To be sure, there are many definitions, but Dashboard Insight defines it as:
Turning data into knowledge to support informed decision making.
Successful BI implementations require technology to store, analyze, and present data; furthermore, it requires a certain way of thinking: the BI Philosophy.
The following image illustrates the BI Technology Stack and depicts the relevant technologies typically needed to implement BI in an organization.
The data layer consists of technologies that organizations use to store their raw data (web statistics, sales transactions, etc.). Examples of these technologies include Microsoft SQL Server, Teradata, MySQL, and Excel.
The analytics layer draws from the data layer. Data is processed to support the analysis required to achieve knowledge and insight (statistical analysis, forecasting, etc.). For example, an analytics package could take historical sales transactions and forecast the expected revenue over the next six months. The process of turning data into knowledge is at the heart of BI, and it takes place here at the analytics layer. Vendors that provide analytics technology include Microsoft, SAS, SAP Business Objects, and IBM Cognos.
The presentation layer delivers the processed data in a meaningful and intuitive way to data analysts, business analysts, and individuals at all levels within an organization. Presentation media include dashboards, visual analysis tools, scorecards, and reports. These are all visual representations of information for decision making by helping to identify correlations, trends, outliers (anomalies), patterns, and business conditions. Vendors that provide these types of tools include Dundas, Tableau, Klipfolio, and Inetsoft.
Ultimately, the goal of BI is to support informed decision making and toward this end, the role of technology is obvious. What is less apparent – but just as critical – is that technology alone cannot produce informed decision making, which requires a strong organizational commitment to the BI Philosophy.
The BI Philosophy
The BI Philosophy is about aligning an organization’s operational activities with their strategic goals. Norton and Kaplan discuss this in greater detail in Balanced Scorecard: Translating Strategy into Action, however, aligning operations with goals essentially boils down to effective communication.
All members of the team must be on the same page for BI to bring true value to an organization. Corporations need to communicate their strategic goals to their workforce and workers need to understand how their daily activities contribute to achieving those goals. This helps identify the right performance measures (aka metrics) to monitor as well as the appropriate collection of data to support those metrics. When this is in place, operational metrics can be defined that will correlate with strategic metrics. By monitoring daily activities while keeping strategic objectives in mind, decision makers will make the right choices to increase the bottom line.
The communication of strategic goals and data collection is critical to successful BI. The following example of one without the other is an extreme case, but one that helps highlight the point. Consider the call centre of a fictional telecommunications provider. An agent’s job is to resolve simple (assume “simple” is defined in his guide book) inquiries in five minutes or less. He is heavily judged on this metric and if he fails he will be reprimanded. The agent will do whatever it takes to maintain a low response time. He discovers an easy way to keep this number low: he either transfers any call to a second-level support associate when he approaches the five minute mark, or he answers incompletely, forcing the customer to call again. This approach will negatively affect the company by increasing the second-level support associates’ workload and angering customers.
Now, let’s take the same scenario but include the fact that the agent is highly aware of the corporation’s strategic goal to be an industry leader in customer service. He knows his responses must be quick, but he must also keep customer satisfaction in mind. With the proper level of communication, the agent knows his actions must align with both his performance metric as well as the corporation’s strategic goal.
The BI Philosophy explained here is at the heart of the material Dashboard Insight provides. Building on this with the tools and material provided in our Getting Started section, will take you one step closer to implementing a successful dashboard solution for your organization.