Dash for KPIs can undermine performance dashboards   20th March 2006 Flashy dashboards makes the science of performance management is look deceptively easy. However, the notion that performance management can be delivered by technology alone is misguided. Implementing a dashboard without regard to business strategy, the underlying performance management processes or an appropriate organisational framework is doomed to failure. Prompted by a new book “Performance Dashboards”, FSN looks at the issues. The science of performance management is a relatively new and developing discipline. Early attempts to understand business performance were thwarted by the lack of effective and affordable technology. Today we take for granted the ease with which transaction systems can be summarised into data warehouses and exposed across an entire organisation for query, analysis and reporting. Powerful web based technologies allow information to be ‘sliced and diced' on demand and presented in ever more fanciful and imaginative graphs, dials, traffic lights and maps. However, the notion that performance management can be delivered by technology alone is misguided – dashboard technology is no more a guarantee of business success than a formula one motor car in the hands of a novice. Implementing a dashboard without regard to business strategy, the underlying performance management processes or an appropriate organisational framework is doomed to failure. John McKenzie, head of the financial intelligence practice at SAS agrees. He told FSN, “People do dash for the technology, forgetting that it is purely an enabler and not the answer,” he told FSN. Yet organisations persist in a technologically driven approach to performance management, sometimes aided and abetted by a software industry that should know better. The idea that all critical performance metrics can be captured on a single screen and all delinquent activity unearthed at the touch of a button is beguiling and there are many notable successes. But the technology often masks the significant planning and effort required to make a dashboard successful. So what is a dashboard? A new book, called “Performance Dashboards” written by Wayne W Eckerson suggests a rather neat definition as follows, “Performance Dashboards let busy executives, managers and staff view the performance of key business metrics at a glance and then move through successive layers of actionable information in a carefully guided manner, so that they get the insight they need to solve problems quickly, efficiently and effectively. By helping business people keep a pulse on their business and chart progress towards meeting strategic and tactical objectives, performance dashboards are becoming powerful agents of organisational change.” At fist sight, the idea that dashboard technology can precipitate and sustain organisational change appears somewhat ambitious and boastful. However, management schools consistently point out that most businesses do not fail to execute on their strategy because it is flawed but rather because they fail to communicate it to their management and staff. Dashboards help to overcome these failings by providing a platform for the dissemination of the strategy and the metrics that are used to monitor its delivery. As such, they bridge the gap between strategic objectives and operational behaviour and over time can provide a very effective means of aligning an organisation's resources with its strategy. It is therefore clear that dashboards cannot be implemented in a vacuum. By definition, a dashboarding initiative requires a clear view of strategy, objectives and performance measures (KPIs) – something that experience says cannot always be taken for granted. SAS' McKenzie told FSN, “Dashboards can only really fulfil their role if the performance measures they contain are strictly aligned with the strategy. Otherwise there is a disconnect between what is measured and what is achieved.” In the rush to implement a dashboard many businesses are tempted to convert an Excel based dashboard without really considering its limitations. “An Excel based dashboard is essentially a two dimensional tool yet business problems are characteristically multi-dimensional, so that a problem in one area can have a knock-on effect in another. These ‘cause and effect' relationships need to be considered to ensure that the right performance measures are in place. At the early stages of a recent dashboard implementation, a financial services organisation wanted us to implement an Excel based dashboard. There was nothing wrong with the measures in the Excel system it is just that they were not the most appropriate strategic measures,” added McKenzie. But not all dashboards are strategic in nature or all pervasive. Eckerson, for example, points to the value of more limited operational and tactical dashboards designed to deliver performance benefits on a smaller or more localised scale. Nor are dashboards confined to finance. Dashboards are gaining ground in all functional areas and for example, Toyota uses them in sales and logistics, as well as for monitoring customer satisfaction. Vodafone use them to monitor call centre operations and Logitech use them to mange billings, bookings and backlogs. Vodafone says its dashboards has enabled continuous improvements in customer service, optimal allocation of call centre staff, faster access to actionable performance data and more effective support for corporate goals and initiatives. Nevertheless, even where dashboards are tactical, McKenzie guards against using non-strategic KPIs. “Strategic measures should cascade down through the organisation so that even tactical dashboards make sense in a strategic context. Otherwise you have to ask what the relevance of the activities being measured is.” Regardless of scope, the introduction of dashboards requires a number of pre-requisites for success to be in place. Eckerson says, “dashboards cannot take place in a hostile environment” and points to the need for strong and committed sponsorship, a culture of measurement, as well as the support of middle mangers. McKenzie agrees with Eckerson about the need for a ‘measurement culture' if a dashboard initiative is to succeed. “One of the barriers to implementing a dashboard is the fear factor. Managers need to be comfortable that their performance is being measured and you have to have a culture that isn't unreasonably critical of missed performance. The KPIs' are there to inform business decisions and improve performance,” remarks McKenzie “they are not there to support a blame culture,” he adds. It would also be a mistake to make light of the technical pre-requisites necessary to deliver a successful dashboard project. Dashboards look deceptively easy to implement because of the limited number of performance measures involved but by their very nature they tend to draw on a number of different data sources. Each of these may require extensive definition, mapping and manipulation before they can be loaded into a data warehouse. It may take considerable effort to refine this procedure into a repeatable and dependable process that can be triggered automatically when required. Similarly, it can take time to define business logic around the treatment of data and the conditions giving rise to variances and business alerts. As well as importing data into the business dashboard the user interface has to be intuitive to use for a wide range of users as well as supporting drill down into underlying databases when variances are being pursued through the system. Thus, the dashboard is rather like the tip of the iceberg with most of the substance of the application tucked out of view below the water line. For all of these reasons it is clear that creating a performance dashboard is strategically, operationally and technically challenging. Vastly improved web based technology means that rolling out a performance dashboard across an enterprise is a realistic goal but to the untutored eye the slickness of the technology makes delivery look deceptively easy. Yet there is no ‘quick win' and if dashboard technology is to succeed then implementation projects need to be grounded in strategy and supported with traditional information systems skills and values. Dashing into dashboards should never be confused with the serious business of performance measurement! “Performance Dashboards” by Wayne W Eckerson is published by John Wiley & Sons Related FSN articles Is the strategic planning process broken? SAS Financial Management (FM) Performance Dashboards Geac Strategy Management Cartesis BPM Extended Suite Performance Reporting under the EU Accounts Modernisation Directive
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