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Effectiveness of Dashboards for Business Performance Management

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Advancements in information technology have brought in a wave of change in the way firms and enterprise function. The enormous amounts of data businesses deal with increase the difficulty for the decision makers to assess the parameters involved in the determination of performance of the business. The data required for any process in the organisation may have multiple dimensions that the managers must assess before taking decisions. The task for the manager is eased out extensively through the use of dashboards that carry relevant data along the lines of the parameters of performance defined by the organisation. Decisions can be taken faster and more effectively based on the figures present on the dashboard. This translates to improved business performance for the organisation.

In the early days of the digital revolution, data was produced mainly as PCs were adopted and became ubiquitous, and later as music, movies, TV and games became digital. These days, believe it or not, there are far more consumer digital goods than there are humans, all constantly producing, accessing and sharing data. All of that still leads to increasing data as more traditional media is converted to digital, as our entertainment libraries grow, and as video and audio resolution keeps improving. Keep in mind, almost all the data we use on these goods either exists on, or also has iterations in, enterprise data centers and servers on the internet.

Due to continuous advancements in Information technologies and the fast-paced nature of the business environment today, organizations generate and deal with increasingly more data. Managers are often overwhelmed with reports and information churned out from a multitude of organizational information systems such as Enterprise Resource Planning (ERP), performance scorecards, and business intelligence (BI) software that compete for managers’ attention. This phenomenon is generally known as information overload. The problem is further exacerbated when reports are poorly designed with respect to how information is presented, which often distract than guide decision makers’ attention.

Performance dashboards might offer a remedy to the information overload problem by providing an all-inclusive package for performance management, incorporating various concepts and applications such as strategy maps, scorecards, and BI into one manageable solution. Although promising, a dashboard’s value is inextricably linked to its features and the way they are utilized in organizations. However, there is no agreement over how exactly a dashboard should look like and what it should do. Generally speaking, a dashboard is expected to collect, summarize, and present information from multiple sources such as legacy, ERP, and BI software so that the user can see at once how various performance indicators such as order-fill rates and sales returns are performing. As far as data is concerned, a dashboard represents the tip of an iceberg, i.e. what the user sees at first and if needed, analyses further to uncover causes of poor performance. The software vendor market reflects the lack of consensus over the dashboard concept. Whereas some solutions come with ―full‖ features, i.e. interactive drill down capabilities, scenario (what-if) analysis, built in automated alerts, customization options, etc., others are more simple and static by nature.

The study conducted for this paper was carried out with the help of five papers published on the usage of dashboards and the impact of them on the business performance of the company. Talks about the key analysis one can perform using the dashboards, which translates into business intelligence and the collection of data on the dashboards to enhance the business analysis processes. Yigitbasioglu and Velcu highlight about the correlation between dashboards and performance management. They discuss important design factors for a dashboard. Design of a dashboard is a vital essential in translating the recorded data into enhanced performance. A case study in the creation and implementation of a dashboard for a SaaS provision. It discusses in detail the nuances in creation of a dashboard for a smooth interpretation. Eckerson talks about, in depth, the measuring and managing of a business through the use of dashboards.

A data dashboard is an information management tool that visually tracks, analyzes and displays key performance indicators (KPI), metrics and key data points to monitor the health of a business, department or specific process. They are customizable to meet the specific needs of a department and company. Behind the scenes, a dashboard connects to your files, attachments, services and API‘s, but on the surface displays all this data in the form of tables, line charts, bar charts and gauges. A data dashboard is the most efficient way to track multiple data sources because it provides a central location for businesses to monitor and analyze performance. Real-time monitoring reduces the hours of analyzing and long line of communication that previously challenged businesses. In the 80‘s, managers tried to find a way to transform the strategic objectives of the enterprise in organizational behavior. Two researchers from Harvard, Kaplan and Norton, who are considered the parents of Dashboards, created a system that transformed strategies into actions, based on Balanced Scorecards method. After implementing it, some enterprises achieved successes, while others considered it a generator of additional expenses.

Over time, the model has developed and matured and is now in the third generation, suffering significant improvements. Currently, the model is used by companies around the world (Hilton, Infosys, Ingersoll Rand, Kraft Food, Merck, Lockheed Martin, Marriott, Motorola, Ricoh, Saatchi & Saatchi, Siemens, Cisco, Skandia, Statoil, UPS, US Department of Commerce, US Army, FBI, Royal Air Force). Modern dashboards display key performance indicators (KPIs) and key risk indicators (KRIs), in related charts, maps and scorecards, in order to enable an enterprise focus on the most important performance activities. The purpose of the dashboard is to display information on a single screen in a clear manner, in order to be understood by everyone. Dashboard is an application or a user interface that helps to measure the performance of the enterprise, understand the organizational units and the business processes. Due to web development, dashboards began to be used to reflect financial indicators in a manner understood by everyone. There are three types of dashboards: operational, tactical and strategic. The executive departments use the strategic and tactical dashboards, the mid-level management uses all three types of dashboards, while the CEO uses strategic and operational dashboards. When implementing a dashboard should be considered: the objective, the audience, the impact, the data needed to analyze the problem, if are needed filters and in what format will be used the Dashboard (PC, mobile, iPad, etc.).

There are no rules laid down to design the dashboard in a certain way, as the needs differ from one organisation to another. However, for ease of interpreting data for the managers and for aesthetic ergonomics, few pointers that can be followed are provided in the following lines. Businesses expect a simple view that presents all information, shows trends and risky areas, updates users on what happened — a view that will guide them into a bright financial future. A dashboard must be designed to be a one-glance preview of the most crucial information for the user at the moment he is looking at it,and an easy way to navigate directly to various areas of the application that require users attention. The term dashboard is a metaphor for a car dashboard, sometimes also called the cockpit area, usually near the front of an aircraft or spacecraft, from which a pilot controls the aircraft.

In essence, performance dashboards are information systems for decision support. Yigitbasioglu and Velcu regard dashboards as data driven decision support systems. Namely, performance dashboards are enabled by business intelligence (BI) which is a discipline under a decision support system umbrella term. Business performance management consists of business processes and applications for optimizing development and execution of a strategy. There are two main tasks performance management aims to accomplish: facilitating a creation of key performance metrics and objectives as well as supporting management of performance to reach those goals. As yet another discipline highly populated with industry buzzwords, business performance management can be referred as corporate performance management, enterprise performance management, operational performance management or strategic enterprise management. Many refer to business performance management with a more generic term: performance management. Eckerson identifies performance dashboards as an integral part of performance management systems that can assist managers in planning and execution of a strategy in all four stages of a performance management cycle: strategizing, planning, monitoring, and acting/adjusting. Strategizing is a phase when executives define vision, mission, values, objectives, and incentives. Key drivers and their measures called key performance indicators (KPIs) are sometimes mapped to strategy maps. The planning phase is developing plans and allocating resources to support a strategy. After the implementation of the strategy has taken place, monitoring in a timely manner and analyzing with the help of performance dashboards should take place. Finally, in the act/adjust phase, the process of deciding, acting, forecasting, developing scenarios, and adjusting the strategy should be performed.

Performance measurement systems rely heavily on key performance indicators and balanced scorecards. Key performance indicators are strategic objectives and performance measures against the goal. They can be lagging (outcomes, e.g. profitability) or leading (drivers, e.g., sales and costs). KPIs have a variety of features. They can include strategic objectives; measure against specific targets; have performance ranges; can be encoded in software to enable visual display, have time frames and benchmarks.

Dashboards convey information through a process referred to as visualization. Information visualization refers to the use of interactive visual representations of abstract, non-physically based data to amplify cognition. Encoding and decoding is facilitated through the use of visual attributes such as shape, position and color, and textual attributes such as text and symbols, which themselves are represented with simple visual attributes. Visualization is effective if the decoding is done correctly, where perceived data quantities and relationships between data reflect the actual data. Visualization is efficient if the maximum amount of data is perceived in a minimum amount of time. Visual perception involves two elements: the perceptual and conceptual gist. The perceptual gist refers to the process of the brain when it determines the properties that provide the structural representation of a scene, like color and texture. The conceptual gist refers to the meaning of the scene (what the viewer sees), which is improved after the perceptual information. Dashboards can be evaluated according to how well they facilitate the encoding and decoding of information. Furthermore, a good balance between visual complexity and information utility is required. Visual complexity refers to the degree of difficulty in providing a verbal description of an image. Visual complexity might increase with the quantity and range of objects as well as with varying material and surface styles. Conversely, repetitive and uniform patterns and existing knowledge of the objects in the scene reduce visual complexity.

In conclusion, dashboards might be implemented at all the levels of the enterprise, as a tool that changes the business culture. One of the most important benefit of using dashboards is the fact that managers can analyse a single screen where are monitored the key risk indicators, or the key performance indicators and can make decisions and undertake actions to mitigate the risks and improve the performance of the enterprise. Tableau Public is a useful tool for creating interactive dashboards, which analyse millions of data in seconds. A dashboard that monitors the evolution of sales, enables the manager to make decisions regarding the market position, performance of brands, etc.

References

  • Ioana-Alexandra, Bradea & Claudia Diana, Sabau-Popa & Bolos, Marcel. (2014); Using Dashboards In Business Analysis’; Annals of the University of Oradea. Economic Sciences
  • Ogan M. Yigitbasioglu, Oana Velcu; A review of dashboards in performance management: Implications for design and research‘; International Journal of Accounting Information Systems (2012)
  • Viktorija Lofvinga; The Purposes of Performance Dashboard Use: A Case of a Procurement Performance Management SaaS Provider‘; Master’s thesis- Department of Information and Service Economy Aalto University School of Business
  • Eckerson, W. (2011); Performance Dashboards: Measuring, Monitoring, and Managing Your Business’; Second Edition, John Wiley & Sons, Hoboken, U.S., pp. 29, 1-318
  • Heikki Lempinen; Constructing a Design Framework for Performance Dashboards‘; Scandinavian Conference on Information Systems 2012

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Effectiveness of Dashboards for Business Performance Management. (2022, August 30). GradesFixer. Retrieved December 6, 2022, from https://gradesfixer.com/free-essay-examples/effectiveness-of-dashboards-for-business-performance-management/
“Effectiveness of Dashboards for Business Performance Management.” GradesFixer, 30 Aug. 2022, gradesfixer.com/free-essay-examples/effectiveness-of-dashboards-for-business-performance-management/
Effectiveness of Dashboards for Business Performance Management. [online]. Available at: <https://gradesfixer.com/free-essay-examples/effectiveness-of-dashboards-for-business-performance-management/> [Accessed 6 Dec. 2022].
Effectiveness of Dashboards for Business Performance Management [Internet]. GradesFixer. 2022 Aug 30 [cited 2022 Dec 6]. Available from: https://gradesfixer.com/free-essay-examples/effectiveness-of-dashboards-for-business-performance-management/
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