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Dashboards and Scorecards    [Date Added : 03/04/2005 ]
Dashboards and scorecards have become increasingly popular over the past few years because they hold the promise of ensuring regulatory compliance, improving performance, tracking outsourcing efficiency and helping companies do more with less. Unfortunately, most companies have implemented dashboards to solve specific problems, such as creating a single view of customers or monitoring inventories, and few have taken a truly strategic approach to using dashboards to improve enterprise performance.

These are some of the observations of Patrick Morrissey, worldwide marketing director, enterprise performance management for Business Objects, and taken from his recent article published in DM Direct Newsletter. He believes that this may well change in 2005, especially in large organizations where so many departmental dashboard projects have moved from successful pilots to expanding deployments. Morrissey indicates that these companies are now positioned to leverage these dashboards for more strategic initiatives, tying dashboards directly to specific business objectives.

Today's Dashboard Reality

Despite the hype that dashboards automatically deliver "business intelligence," most organizations don't have a comprehensive strategy for performance management. Instead, they have internal departments playing "dashboard survivor," where users seem to compete to see if their dashboard will be selected over all the others for enterprise-wide deployment. The sales and marketing teams have dashboards to measure sales effectiveness and pipeline, customer purchasing and marketing spending. The CFO and finance team use dashboards to drive US Sarbanes-Oxley 302 and 404 compliance, risk management and management of margin targets. And logistics teams, HR, legal and the IT department all have their own dashboards.

The good news, according to Morrissey, is that the dashboard and scorecard frenzy is serving more information and more metrics more quickly to more people. The bad news is that many organizations can't sort out their key performance indicators (KPIs) from all their performance metrics. More important, most dashboards are not relevant outside of specific departments. For example, the finance department's compliance scorecards, built on top of financial and operational applications, don't provide the right information or the flexibility for the sales and marketing teams focused on top-line growth.

Lack of standards, multiple IT tools, bad data and fuzzy or non-existent business cases only compound the problem, and it is easy to see how short-term wins with tactical dashboard projects may set the stage for another wave of IT failures.

Morrissey notes, however, that there may be light at the end of the tunnel. The key is to build all dashboards and scorecards on a very practical framework for performance management success. The first step to developing this framework is deciding which specific problems you need to solve. The second step is understanding how you can leverage these individual solutions to increase communications and improve processes and systems throughout your organization.

Any organizational strategy can be mapped back to one of three primary areas of focus: corporate purchasing, selling, and managing its internal processes, assets and people. Tying every dashboard project to specific organizational priorities in these areas provides a simple way to build the appropriate business cases and allocate the required resources to improve performance across the organization.

Internal Processes

Dashboards and scorecards are increasingly being used to help companies manage internal processes, assets and people. In finance and operations departments, dashboards are enabling initiatives to improve planning, risk management and capital management initiatives while providing the summary view of internal controls required by sections 404 and 409 of the US Sarbanes-Oxley act. In the same way, more sophisticated organizations focused on human capital management have developed dashboards and analytics to manage everything from skills training to diversity recruitment and benefits administration.

Every department benefits from a focus on key metrics, and IT is no exception. The managed services organization at HP provides an excellent illustration of how connecting metrics to daily performance delivers improved overall performance and reduces cost. HP sets out to measure the performance of IT for employees with the goal of measuring return on IT investment and improving the level of IT service to all employees worldwide.

Using dashboards to manage key metrics around both internal and external service providers, HP achieved an 80 percent increase in staff productivity by automating many manual processes and enabling end users to serve themselves. Response time to service and provisioning requests has been reduced from hours or days to minutes. As a result, HP saved millions of dollars a year and increased service performance for employees. The organization also transferred best practices from its internal IT group to its outsourcing business, increasing a competitive advantage.

Dashboard Requirements and Performance Success

Morrissey says that while achieving a single view of KPIs in one dashboard or scorecard can deliver pockets of success, your initiatives will reap greater strategic benefits from cross-departmental and cross-organizational projects that focus on people, processes and systems.

People: One of the key benefits of internal dashboard projects is the ability to get the right information to the right people at the right time by creating a collaborative environment that promotes group communication and decision-making. Dashboard and scorecard projects should also focus on an alerting functionality that can direct attention to problem areas that need to be addressed immediately and that provide a context for responding quickly to these needs with the right collaborative approach.

Processes: By itself, tracking business metrics does not mean people can or will change the way they work. Making the leap from dashboard deployment to improved processes requires both the careful capture of information - aligned with the way people actually use the information - and a management approach that takes into account process requirements that move across departments. The sales cycle - including quote, contract, delivery and payment - is an excellent example of a process that crosses departments - sales, operations, legal, transportation and logistics. A dashboard project that makes it easier for salespeople to process orders quickly and ensure they are accounting for terms, conditions and legal requirements drives improved sales effectiveness. Not only are salespeople more effective, but customer complaints decrease and customer loyalty improves because all the people involved in the process are using the same information at the same time.

Systems: An ineffective dashboard is often the result of data that is incomplete, invalid, not centrally controlled or completely unavailable because it is locked in a data silo. A strategic approach to dashboarding should also include a business intelligence framework for more advanced analytics and centrally managed reporting. It should ensure that architecture and project plans provide for inclusion of imported metrics from both internal and external sources. This will create an infrastructure that enables dashboard and scorecard initiatives to deliver the greatest strategic benefit by ensuring a single, complete view of the truth.

Morrissey states that for dashboards and scorecards to reach their full promise, they must begin to deliver strategic benefits. To do this, they must be aligned with business goals, they must be based on complete, consolidated and valid data, and they must focus on the people, processes and systems that can truly impact business performance. Using a strategic approach with the end goal in mind, dashboards can deliver improved performance and competitive advantage.

(extract from "Strategic Dashboarding: From Metrics to Performance Management," by Patrick Morrissey, DM Direct Newsletter, January 14, 2005, Copyright 2005, DM Review and SourceMedia, Inc.)
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