Introduction
The objective of this article is to explain how to gather and define KPIs (key performance indicators) and metrics to build a Dashboards (Control Board) of execution activities and operations. Although the techniques discussed here are applicable to select any type of KPI for any type of industry, the objective of the article will be on the steps to follow so that such selection results in an effective Dashboard format.
What is a Dashboard?
The name Dashboard refers to the dashboard of a car, which offers the driver permanent information about the state of the vehicle. The business world takes the word with a similar meaning but instead of applying it to automobiles it refers to the company.
Thus, Dashboard is a page developed based on web technology through which company information extracted from various sources or databases is displayed in real time. Its real-time feature gives users complete insight into the running of the business and enables instant analysis and business intelligence.
Metrics and KPI
Metrics and KPIs are the basis for building a Dashboard with a great visual display, since they are the most effective tools to alert users as to where they are standing in relation to the objectives. Therefore, it is important to have a clear definition of these elements that constitute the basis of the Dashboard design.
Metrics
When we use the term metric we mean a direct numerical measure, which represents a set of business data in relation to one or more dimensions. An example would be: "gross sales per week." In this case, the measure would be weights (gross sales) and the dimension would be time (week). For a given measure, you may also want to see the values through different hierarchies within a dimension. For example, when viewing the gross sales by day, week or month, the measurement of weights (gross sales) by different hierarchies (day, week and month) within the time dimension will be shown. Making a more detailed opening of a measure within a certain hierarchical level of a dimension is to pursue a goal of great detail for the metric studied.
Looking at a measure through more than one dimension, such as gross sales by territory and time, is called multidimensional analysis. Most Dashboards only do multi-dimensional analysis in a limited way depending on the BI (Business Intelligence) tools you use for it. This is important to bear in mind, because if in your process of defining the information you want to enter the Dashboard you discover an important multidimensional need, then it will be necessary to study the possibility of complementing your dashboards with some kind of multidimensional analysis tool.
Key performance indicators (KPI)
A KPI is simply an indicator that is linked to a goal. In most cases, a KPI shows the status of an indicator, that is, if it is above or below a pre-determined goal. KPI's are generally displayed as a rate or percentage and are designed to allow a business user to instantly know if they are in or out of their plan without having to search for additional information. For example, we may decide that in order to meet our quarterly sales goal we have to sell $ 10,000 worth of devices per week. The metric would be “device sales per week”, the goal would be $ 10,000. If a display percentage was used to represent this KPI and 8,000 devices had been sold on Wednesday, the user could instantly see that they would be at 80 % of your goal.
Scorecards, Dashboards and Reports
The difference between a scorecard, the Dashboard, and the report can be very subtle. Each of these tools can combine elements of the others, but at a high level they all point to different objectives and separate levels of the company's decision-making process.
Score cards
Starting at the highest, most spectra at the strategic levels of company decision making use scorecards. They are used primarily to help align operational execution with business strategy. The goal of a scorecard is to keep the business focused on a common strategic plan by monitoring real-world execution and organizing the results of that execution for a specific strategy. Scorecards are ideal for representing objectives that are formed with metrics of varying magnitude and therefore cannot be added together and obtain a common measure. An example of a KPI scorecard would be an indicator called "Profitable Sales Growth", which combines several metrics such as: new customer acquisition (number of customers),the volume of sales (dollars), and the gross profitability (percentage) in a final score. As these metrics cannot be added together, they are scored according to their achievement of the objective and this score is added to give a quantitative measure to the KPI "Profitable Sales Growth".
Dashboards
The purpose of a dashboard is to provide the user with company information in a format that is both intuitive and insightful. Dashboards emphasize operational data mostly in the form of numbers and KPIs. Dashboards allow you to break down an overall strategic goal into specific operational goals. The operational goals add value to the fulfillment of the general strategic goal.
Reports
Probably the most viewed BI tool in business today is the traditional report. Reports can be very simple and static in nature, such as a list of sales for a certain period of time, or a more advanced report with grouping, summaries, dynamic data exploration or linking. Reports are most commonly used when the user needs to view raw data in an easy-to-read format. When combined with dashboards and scorecards, reports provide an ideal means of allowing users to analyze hard data by highlighting its metrics and key performance indicators.
Gathering KPIs and Metric Requirements for a Dashboard
Traditional BI projects often use a bottom-up approach to needs determination, where the focus is on the domain of the data and the relationships that exist within that data. When relating Metrics and KPIs for a Dashboard project it is preferable to take a top-down approach. A top-down approach starts with the business decisions that need to be put first and then works its way down to the data needed to support those decisions. In order to take a top-down approach you MUST involve the actual user who will be using these dashboards, as they are the only ones who can determine the relevance of company-specific data to their decision-making processes.
