23rd January 2006
Dashboards have been in existence almost as long as mankind has inhabited the earth. Early cave drawings and Egyptian hieroglyphics graphically depict all kinds of successful performance around providing food, harvesting crops, herding livestock and major building projects. How interesting that a picture produced thousands of years ago can convey a message so precisely and easily. The old adage that a picture is worth a thousand words appears to be entirely vindicated and so it is with performance dashboards.
But performance dashboards are more than gimmicky pictures and whilst the examples drawn from ancient Egypt and early cavemen demonstrate the value of graphical depiction of information they are not entirely helpful since the information was hardly available in real time and gave no indication of future performance.
Andy Neely, a Professor at Cranfield University , School of Management , speaking at a performance management event pointed to the cockpit display of a fighter aircraft as a good analogy for a management dashboard. A modern military aircraft is a multi-functional, automated and highly complex collection of weaponry yet its performance can be presented in a handful of essential dials and displays. The pilot can instantly see his compass, altimeter, fuel gauge, and horizon from which he can instantly assess his current performance and what he needs to do to reach his goal. Similarly, dashboards should be able to convey information as a limited number of key performance indicators, KPIs to provide real-time understanding of performance and guide future management actions.
One of the problems, says Neely, is that technology provides so much capability that management want to measure everything! So many organisations surround themselves with hundreds of KPI's ignoring the "Key" in Key Performance Indicator. This problem and the software industry's habit of showing a fancy graphical display to enliven every software demonstration is what have given dashboards a bad name. The bewildered end user cannot see the difference between a dashboard and an Excel graphic. But with sufficient foresight about the information that is needed to drive performance, dashboards provide an extremely effective way of communicating through the business and making better business decisions.
Dennis Horner, managing director of Atos Consulting told FSN, "Dashboards can provide vital monitoring and early warning. For example, one energy company uses dashboards to monitor maintenance expenditure and structural problems on near shore oil rigs. Management can see what is happening and put preventative measures in place when they anticipate a structural problem. This emphasis on leading indicators and anticipating problems saves lost production and huge amounts of money. It also shows the value of dashboards in an operational setting beyond the finance department.".
"A good dashboard will collect information from a variety of sources and display it together in one place leaving the user to drill down for more detailed explanations", says Horner.
[SPONSORED LINK BY HYPERION A complete collection of real-life dashboards submitted by their customers is available for download (approximately 2Mb) to FSN readers. To download the dashboard collection, click here]
Dashboard of the week - Billings , Bookings and Backlog
The challenge Logitech, the market leader in PC peripherals, was struggling to get actionable information out to business users in a timely manner. Managers had to rely on Finance to provide performance analysis based on data from Oracle ERP and data warehouses. This was a time-consuming, manual process that limited the depth and timeliness of insight available to decision-makers. It also slowed the company's financial close.
The solution Logitech created a Billings , Bookings and Backlog (3B) application that provides users across the organisation with powerful customised Web dashboards. These dashboards deliver near real-time visibility into key performance indicators by customer, region, product, and sales channel. They empower decision-makers to fully leverage ERP and other data sources to respond to changing market demand, minimise inventory levels, and prioritise high-margin business-ensuring that every manager can make an optimum contribution to overall business performance.
Results
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Optimized decision-making at every level of the business
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More rapid response to issues that can potentially impede financial performance
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Reduced cost-of-data distribution and access
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Faster time-to-close
"Logitech executives can now access and analyse up-to-the-minute information on what is happening in their areas. This has made us all more proactive and accountable", says Kristen Onken, Senior Vice President, Finance and CFO, Logitech.
FSN says, note the use of colour coding to highlight events with real business impact, for example, the backlog in yellow. The reporting filters (options) that allow executives to look at critical and non-critical issues and the left hand graphics which allow users to quickly assess responsiveness of operations to fluctuating demand.
If you have some best practice examples of dashboards that you would like to share with the FSN community of finance professionals then please feel free to send them in to the editor, gary.simon@fsn.co.uk and we will do our best to include them.
