The Key Elements of a Successful Business Dashboard
A business dashboard is a tool that allows management to visualize Key Performance Indicators (KPIs), metrics and other strategic data of the organization at a glance. With data storage becoming easier and more cost effective by the day, the dependence on dashboards to make management decisions is rapidly increasing. Businesses are developing dashboards to help convert data into information and then use that information to make key decisions. However, many businesses fail to develop dashboards correctly, and they provide little to no value. The effectiveness of a business dashboard can be attributed to three key elements viz., KPI selection, data integrity and visual appeal.
KPIs are quantifiable measurements that reflect the critical success factors of an organization. The KPIs selected for the dashboard must be vital to the organization’s success, must benefit the company as a whole and must be directly linked to the business’s mission. While designing dashboards, organizations must also ensure that they choose the right number of KPIs. Too many KPIs clutter the dashboard and distract management with unnecessary and irrelevant information while too few KPIs do not provide a comprehensive view of organizational performance. The KPIs Dashboards should ideally contain four to six KPIs that reflect point in time data as well as trends. Effective dashboards also measure variance against a target and against performance from previous time periods.
Over time businesses collect and store large quantities of data but inefficient processes in the organization lead to data corruption. Using corrupt data can lead to an inaccurate dashboard which may result in management making misinformed decisions. In addition to data quality, care must be taken to ensure that the data collection is comprehensive i.e., it is collected from all relevant systems like ERP, MRP, Accounting, etc., and that the collection process is automated. Automation helps minimize human errors.
The presentation of the KPIs is extremely important. Data must be represented in a simple and intuitive manner so as to not confuse the user but at the same time it must also have all the relevant information to make actionable decisions. Color coding can be used to easily help the user spot anomalies and areas of poor performance. A good dashboard also allows the user to drill down into the details if the need arises. To take the dashboard to the next level, organizations can create an alert system that can send out a signal when a KPI falls below a set threshold.