In past columns, we have explored the definitions, basic concepts and themes of both corporate performance management (CPM) and Six Sigma. We will now shift the focus back to the CPM dashboard. Over the next several columns, we will discuss specific dashboard design considerations and components, and how Six Sigma can streamline the dashboard development effort. You may recall that in my first column (June 2003 issue of DM Review), we defined the CPM dashboard as a customized graphical interface that delivers mission- critical information on a real-time basis to business decision-makers via a variety of visuals, including gauges, alerts, charts, tables and spreadsheets. Keep in mind, however, that CPM dashboards can only be effective if the metrics they capture are aligned with enterprise goals, strategies and objectives, and are proactively leveraged to optimize enterprise-wide decision making and collaboration.
The Scorecard/Dashboard Dilemma
There has been an ongoing debate as to the benefits of a scorecard framework versus a dashboard solution to implement performance management solutions. Early in the debate, scorecards were characterized as visual cockpits to help manage the business at the enterprise-wide level while dashboards were focused on measuring the business at the functional and operational levels. Scorecards were strategic in nature, focused on enterprise alignment and leveraged frameworks such as a balanced scorecard or value-added constructs. Scorecards were about effectiveness doing the right things. Alternatively, dashboards were considered to be more tactical with a process optimization flavor, local accountability, and extensive business intelligence infrastructure. Dashboards were about efficiency doing things right. I propose to you that performance management is now moving to a new level where the lines of demarcation between scorecards and dashboards have blurred, and that the new mantra for performance management reflects the best of both worlds doing the right things right. What you call your cockpit is less about the nomenclature and more about content, visuals and functionality. For our purposes, we will continue to use the term CPM dashboard to reflect the scorecard/dashboard amalgamation.
The Stakeholder Card
The key driver in the design and development of the CPM dashboard is empowering the user to make fact-based business decisions by providing complete information (and metrics) at the appropriate levels of granularity. The user typology in Figure 1 illustrates how the business focus (strategic, tactical or operational) dictates the data granularity requirements, data latency needs and visual presentation constructs. The executive, line-of-business (LOB) manager, functional manager and operations manager all have different needs and priorities.
Figure 1: Performance Management User Profiles
The executive requires an enterprise-wide perspective (i.e., highly summarized data) and both an internal and external window on business drivers. Briefing books and balanced scorecards meet the need for consistent and intuitive interfaces. Enterprise key performance indicators (KPIs) provide visual encapsulation of the "health of the company."
Managers with LOB responsibility need both summarized and detail data so they can drill down on alternative problem dimensions (product, geography, organization, etc.) to identify and address business problems. Drill-through functionality dictates that significant underlying business intelligence infrastructure (versus information islands) must be in place in the organization. LOB managers also require forecasting and simulation capabilities to develop future business projections. Graphs, tables and gauges provide top-line assessments of the "state of the business."
Managers in charge of functional areas such as finance, accounting, human resources and purchasing require domain- specific business indicators. For purchasing, this would include supply chain process and supplier relationship metrics. Visuals that capture inventory pipelines, supplier costs and buy/make/sell KPIs and trends are critical for capturing and identifying areas of opportunity.
The operational managers require the most detailed level of data granularity. The need to actually measure and manage a process or transaction in real time (or near-real time) differentiates this user from the executives, LOB managers and functional managers who leverage data more in an analytical context. For operational managers, feedback loops are incorporated to measure, monitor and adjust processes. The detail data from operations is typically used in performance measurement systems, while summary statistics are incorporated in performance management systems.
The multiple needs of the user community give credence to the dictum that "one size does not fit all." Success in designing an effective CPM dashboard is contingent on meeting the specific needs of all the individual user groups. Next month, we will focus on the visual components of an effective CPM dashboard and how the different user topologies profiled in this month's column drive the selected components.
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