Performance Dashboards

Measuring, Monitoring, and Managing Your Business

Wayne W. Eckerson

• Publisher: Wiley
• Year: 2010
• Print ISBN: 9780470589830
• eBook ISBN: 9780470918425
• Edition: 2
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Tips, techniques, and trends on harnessing dashboard technology to optimize business performance

In Performance Dashboards, Second Edition, author Wayne Eckerson explains what dashboards are, where they can be used, and why they are important to measuring and managing performance. As Director of Research for The Data Warehousing Institute, a worldwide association of business intelligence professionals, Eckerson interviewed dozens of organizations that have built various types of performance dashboards in different industries and lines of business. Their practical insights explore how you can effectively turbo-charge performance–management initiatives with dashboard technology.

• Includes all-new case studies, industry research, news chapters on "Architecting Performance Dashboards" and "Launching and Managing the Project" and updated information on designing KPIs, designing dashboard displays, integrating dashboards, and types of dashboards.
• Provides a solid foundation for understanding performance dashboards, business intelligence, and performance management
• Addresses the next generation of performance dashboards, such as Mashboards and Visual Discovery tools, and including new techniques for designing dashboards and developing key performance indicators
• Offers guidance on how to incorporate predictive analytics, what-if modeling, collaboration, and advanced visualization techniques

This updated book, which is 75% rewritten, provides a foundation for understanding performance dashboards, business intelligence, and performance management to optimize performance and accelerate results.

PART I
The Landscape for Performance Dashboards

Part I provides context for understanding performance dashboards. Chapter 1 describes the MAD framework for designing performance dashboards, including the “three threes.” Chapter 2 provides background on the disciplines of performance management and business intelligence, which intersect in the form of a performance dashboard. Chapters 3 and 4 help you evaluate the organizational and technical readiness of your organization to deploy performance dashboards. Chapter 4 in particular describes my BI Maturity Model, which shows how organizations evolve their BI environment, including performance dashboards. Chapter 5 zeroes in on the key to the success of any BI application, which is a strong partnership between business and the information technology (IT) department.

CHAPTER 1
What Are Performance Dashboards?

The Context for Performance Dashboards

The Power of Focus

Executives in Training. In the summer of 2004, I found my 11-year-old son, Henry, and his best pal, Jake, kneeling side by side in our driveway, peering intensely at the pavement. As I walked over to inspect this curious sight, I saw little puffs of smoke rising from their huddle. Each had a magnifying glass and was using it to set fire to clumps of dry grass as well as a few unfortunate ants that had wandered into their makeshift science experiment.

In this boyhood rite of passage, Henry and Jake learned an important lesson that escapes the attention of many organizations today: the power of focus. Light rays normally radiate harmlessly in all directions, bouncing off objects in the atmosphere and the earth’s surface. The boys had discovered, however, that if they focused light rays onto a single point using a magnifying glass, they could generate enough energy to burn just about anything and keep themselves entertained for hours.

By the time Henry and Jake enter the business world (if they do), they will probably have forgotten this simple lesson. They will have become steeped in corporate cultures that excel at losing focus and dissipating energy far and wide. Most organizations have multiple business units, divisions, and departments, each with its own products, strategies, processes, applications, and systems to support it. A good portion of these activities are redundant at best and conflicting at worst. The organization as a whole spins off in multiple directions at once without a clear strategy. Changes in leadership, mergers, acquisitions, and reorganizations amplify the chaos.

EXHIBIT 1.1 Organizational Magnifying Glass

Companies need an “organizational magnifying glass” that focuses the energies and activities of employees on a clear, unambiguous set of goals and objectives laid out in the corporate strategy.

Organizational Magnifying Glass. To rectify this problem, companies need an “organizational magnifying glass”—something that focuses the work of employees so everyone moves in the same direction. (See Exhibit 1.1.) Strong leaders do this. However, even the voice of a charismatic executive sometimes is drowned out by organizational inertia.

Strong leaders need more than just the force of their personality and experience to focus an organization. They need an information system that helps them clearly and concisely communicate key strategies and goals to all employees on a personal basis every day. The system should focus workers on tasks and activities that best advance the organization’s strategies and goals. It should measure performance, reward positive contributions, and align efforts so that workers in every group and level of the organization are marching together toward the same destination.

Performance Dashboard. In short, what organizations really need is a performance dashboard that translates the organization’s strategy into objectives, metrics, initiatives, and tasks customized to each group and individual in the organization. It provides timely information and insights that enable business users to improve decisions, optimize processes and plans, and work proactively. A performance dashboard is really a performance management system. It communicates strategic objectives and enables businesspeople to measure, monitor, and manage the key activities and processes needed to achieve their goals.

To work this magic, a performance dashboard provides three main sets of functionality, which I will describe in more detail later. Briefly, a performance dashboard lets businesspeople:

1. Monitor critical business processes and activities using metrics that trigger alerts when performance falls below predefined targets.
2. Analyze the root cause of problems by exploring relevant and timely information from multiple perspectives at various levels of detail.
3. Manage people and processes to improve decisions, optimize performance, and steer the organization in the right direction.

Agent of Organizational Change

A performance dashboard is a powerful agent of organizational change. When deployed properly, it can transform an underperforming organization into a high-flier. Like a magnifying glass, a performance dashboard can focus people and teams on the key things they need to do to succeed. It provides executives, managers, and workers timely and relevant information so they can measure, monitor, and manage their progress toward achieving key strategic objectives.

One of the more popular types of performance dashboards today is the balanced scorecard, which adheres to a specific methodology for monitoring and managing the execution of business strategy. A balanced scorecard is a strategic application, but, as we shall soon see, there are other types of performance dashboards that optimize operational and tactical processes that drive organizations on a weekly, daily, or even hourly basis.

Historical Context. Although dashboards have long been a fixture in automobiles and other vehicles, business, government, and nonprofit organizations have only recently adopted the concept. The trend started among executives who became enamored with the idea of having an “executive dashboard” or “ executive cockpit” with which to drive their companies from their boardroom perches. These executive information systems (EISs) actually date back to the 1980s, but they never gained much traction because the systems were geared to so few people in each company and were built on mainframes or minicomputers that made them costly to customize and maintain.

In the past 20 years, information technology has advanced at a rapid clip. Mainframes and minicomputers gave way in the 1990s to client/server systems, which in turn were supplanted by the Web this decade as the preferred platform for running applications and delivering information. Along the way, the economy turned global, squeezing revenues and profits and increasing competition for more demanding customers. Executives have responded by reengineering processes, improving quality, and cutting costs, but these efforts have provided only short-term relief, not lasting value.

Two Disciplines. During the 1990s, organizations began experimenting with ways to give business users direct and timely access to integrated information, an emerging field kn own as business intelligence (BI). At the same time, executives began turning to new techniques and methods to manage strategy and optimize performance, a discipline broadly defined as business performance management (BPM), or just performance management. (See Chapter 2 for background on BI and BPM.) Many organizations began using BI to provide the technical scaffolding to deliver information for performance management initiatives. Starting in 2000, it became clear that BI was converging with performance management to create the “performance dashboard.”

This convergence created a flood of interest in performance dashboards. A study by The Data Warehousing Institute (TDWI) in 2004 showed that a majority of organizations (51 percent) were already using a dashboard or scorecard. The same study showed that almost one-third of organizations were using it as their primary application for reporting and analysis. The popularity of performance dashboards has continued to surge. In 2009, TDWI repeated the survey and found that almost three-quarters (72 percent) of organizations have deployed a performance dashboard. (See Exhibit 1.2.)

Benefits. The reason so many organizations are implementing performance dashboards is a practical one: They offer a panoply of benefits to everyone in an organization, from executives to managers to staff. Here is a condensed list of benefits:

EXHIBIT 1.2 Has Your Organization Implemented a Performance Dashboard?

Source: TDWI Research.
Based on 437 and 495 respondents respectively.

• Communicate strategy. Performance dashboards translate corporate strategy into measures, targets, and initiatives that are customized to each group in an organization and sometimes to every individual. Each morning when businesspeople log into the performance dashboard, they get a clear picture of the organization’s...

Table of contents

• Cover
• Contents
• Title page
• Copyright
• Dedication
• Foreword
• Preface to the Second Edition
• Preface to the First Edition
• PART I: THE LANDSCAPE FOR PERFORMANCE DASHBOARDS
• PART II: PERFORMANCE DASHBOARDS IN ACTION
• PART III: CRITICAL SUCCESS FACTORS: TIPS FROM THE TRENCHES
• Index
• Wiley End User License Agreement