Are Dashboards Necessary?
In essence, dashboards serve a crucial purpose in connecting executives with the company’s overall performance indicators. In many cases, companies suffer from multiple application and database sources of disparate data that are rarely integrated. In such instances, a significant amount of manual aggregation is required. The resulting performance data is then typically presented in a functionallycentric display, with each part of the organization focused on their slice of the business.
Rather than depending on a reported format that is hard to digest, dashboards provide a vehicle by which data can
not only be more easily reported, but multiple data can be integrated into fewer reports. For example, having one dashboard report that displays quality incidents, customer complaints, return processing, and warranty replacement metrics with gross margin performance will provide more insightful information than if using traditional functionally-centric reporting methods.
By making the data easier to understand, it can then be more readily translated into corrective action.
What Are the Benefits of Dashboards?
As just discussed, there are a number of benefits to using dashboards for the reporting of your data. The first and most obvious benefit to using dashboards is that they present large amounts of data with easy-to-grasp visuals, revealing at a glance what is most important. This means that complex, dense statistical information becomes understandable and easy to convert into action.
When dashboard metrics are connected to the compensation system, through the use of bonuses and other compensation, there is a commensurate increase in motivation to achieve the stated goals, potentially at every level of the organization. In the absence of a compensation linkage, dashboards tend to be a less effective motivator.
With the increased level of communication, dashboards provide comes a higher level of empowerment as more parts of the organization understand how their functions integrate into the total business plan. For example, as production line personnel become more sensitized to the impact of quality incidences at their work station, they better understand the potential profitability gains that can be achieved by eliminating quality incidences.
Yet, perhaps most importantly, dashboards ensure that information is dispersed throughout all levels of the company, in all necessary formats. Dashboards are able to deliver both a high-level view for executives, which supports better business decisions, and drill-down views for each department. Clevel, upper management, department management, and staff can all see their performance and trending results, so that they can not only identify problem areas quicker, but also better align their responsibilities with overall corporate strategies.
How Do You Create a Dashboard?
For many years, dashboards were only within the realm of six-figure business intelligence applicationslike Cognos and Hyperion. However, recent versions of Microsoft Excel – particularly Excel 2007 and 2010 – support creation of full-featured executive dashboards, especially with the introduction of PowerPivot by Microsoft.
The following steps show how it is possible to create your own executive dashboard. The dashboard ought to be based on previously-identified critical success factors and KPIs, so it is necessary to first follow necessary steps to identify and design those structures for your company. If you are uncertain how to proceed on this step, consult our previous two articles for tips on how to identify your own critical success factors and KPIs.
Once factors and KPIs are identified, it is possible to start building your dashboard. First, build in the dashboard layout including the desired combination of visual depictions. These might include graphs, gauges, charts, or maps, to name a few.
Then it is time to build in your data. Build in the desired data sources, followed by the desired level of data drill-down. Then identify the desired filtering capability of your dashboard.
Finally, after the data input step is completed, you can build any desired user features. This could include navigation capabilities, value range selection, or data input options. This final stage ought to also include the development of parameters surrounding supported users and security features.
In Summary
In conclusion, dashboards are particularly useful tools for the dissemination and integration of data throughout your company, as well as for measuring and managing performance.
A dashboard measures and visually reports on KPIs, with the goal of enabling faster overall understanding of business performance and trending.
Dashboard reporting methods improve significantly on manual methods by disseminating information more quickly, and by ensuring it reaches all levels of corporate organization so that everyone may be aligned with company strategies.
By Arthur Rothberg, Managing Director, CFO Edge, from: http://www.cfoedge.com/resources/articles/cfo-edge-performance-measurement-dashboards.pdf
About CFO Edge
CFO Edge, LLC is a leading Southern California provider of outsourced CFO services. Based in Los Angeles, we are a group of experienced chief financial officers who engage with CEOs and CFOs on demand to address strategic planning, business management, and day-to-day financial operations challenges. Our seasoned professionals deliver services as interim CFOs, part-time CFOs, projectbased CFOs, recruitment-to-permanent CFOs and interim-to-permanent CFOs.