Business Operations Dashboard

Transcription

1 Business Operations Dashboard By Kim Dolman, Managing Director, The Business InQbator Ltd, July 2013 Abstract This white paper describes what business dashboards are, and how they are designed, populated and used. Benefits In a lifestyle business or part-time business or hobby, the owner usually has sufficient intellectual capacity to hold much of the crucial business operational information in their head. Such businesses are relatively simple to operate and there is no need to fancy tools or reports. For more serious businesses there is usually so much information that it is impossible for one person to hold all the figures. There are suppliers, orders, sales, invoices, statutory reports and so much more to keep on top of. As a business grows, the leadership team employs a range of simple devices to help them run operates such as spreadsheets, wall charts, smart phones, and even postits. These are all very useful and in some straight forward businesses they will be sufficient. But for more challenging businesses with multiple stakeholders, complex processes, and interrelated functions, the leadership will need a more heavy duty tool to maintain full situational awareness of their business. Features Typical business dashboard features are monthly turnover, profit, margin and recent orders. But different businesses will have markedly different information in their dashboard, as illustrated in the following table. Type of Business Example Example Dashboard Parameters Product supplier Laptop manufacturer stock levels, defect rate, customer satisfaction, wastage Hospitality Hotel Ave room rate, occupancy, restaurant spend per guest Service provider Facilities management availability, reliability, response times Labour-intensive Call centre staff productivity parameters Certain businesses might decide to include transient information such as a twitter feed or the latest press release. Crucially, an appropriate dashboard will contain whatever information is critical to the effective running of the business. Characteristics The characteristics of an appropriate business dashboard are: Easy to assimilate: clear, well-structured Accurate: populated with the most accurate information Current: populated with the latest information Relevant: focussed on business goals Integrated: it should be integrated with other sources of business information Impactful: conveying important messages directly There are three main aspects to a Business dashboard Presentation: displaying the business information

2 Population: updating it with the latest information and setting the indicators Integration: integrating it with other business tool to facilitate the acquisition of source information. Presentation At its simplest level, a business dashboard is a presentation of key parameters in a format that is easy to assimilate. It provides all the relevant and important information about the way the business is operating. From a well-presented dashboard it is possible to instantly ascertain the health of the business. There is no meaningless or irrelevant information. The presentation may use traffic lights to highlight critical areas. See Figure 1. One quality of good business leaders is that they know the right question to ask. With a comprehensive dashboard, a leader will be able to drill down through the data to gain greater insight. A single headline figure may be informative, but often it simply triggers more questions. For example, Why are margins down 3.4% this month? The cause may be at a deep level and the user will want to drill down through successive layers of driving factors until the root cause is identified. See Figure 2. In fact, the observation may be an emergent property of multiple causes which partially cancel each other out.

3 Population The dashboard is populated using data from other tools, systems and platforms in the organisation. (see Figure 3). Business dashboards should be rigorously interrogated, tested and quality checked.

4 Time and thought needs to be invested in the triggering of action indicators such as traffic lights. For example, a business may decide that a month-to-month profit variation of up to 5% from the target is tolerable in which case the traffic light can remain green, whereas a variation of -10% or worse is red and between -5% and -10% is amber. Red and Amber lead to different types of management action. Action indicators have to be meaningful so it will be necessary at times to tighten or relax the bounds within which parameters can vary before triggering a colour change. If a red traffic light does not lead to management action then, assuming the leadership team is competent, the warning light trigger parameters are incorrect. In businesses where the dashboard is fundamental to the decision-making process, these parameters and triggers will be kept under continual review. If the action indicators do not lead to meaningful management action then the dashboard will quickly fall into disrepute and become redundant window-dressing. Integration Business dashboards have to be integrated with other critical business tools. It may have to take information for management accounts, project tracking tools, production systems, customer relationship tool and human resources platforms. This is the only way it can deliver accurate information and avoid falling into disuse. The interfaces to automatically updated dashboards will need to be maintained as its feeder tools are upgraded. Dashboard integration can be considered in terms of four levels of maturity: Manual populate: this is simply a well-presented notepad (or nifty sheet ) which is useful as the business starts to grow, and if you have a poor memory Manual aggregate: this is a well-presented notepad with information collocated from a range of business tools. It may take a while to source the information and the information may become stale very quickly

5 Auto collate: information is automatically harvested from other business tools and presented to the user. This is of much greater value to businesses with a range of diverse tools and distributed information Auto enhanced: this is where value is added to the collated data, for example by performing additional calculations. By definition, the automatic dashboards have higher setup costs but are easier to keep up to date. As businesses grow, the effort to manually construct a dashboard increases, thus justifying greater investment in automation. In general, it is best to start simple and increase the level of integration and automation as the effort to maintain manually becomes onerous. Leadership Action Argueably, the most important aspect of business dashboards is leadership action. If a dashboard provides pretty pictures and detailed statistics, but no one does anything about it, then the business does not benefit. If leaders have a dashboard and are not using it, either they are failing to utilise all available resources or the dashboard is deficient. Everyone in the business should take an interest in its health and take a view from the dashboard. Maintenance Anyone one the business can suggest changes and enhancements to the dashboard but a single person should be the custodian responsible for its maintenance. The custodian should ask questions like Can the data be displayed more clearly? Is the data out of date? Is it reliable? Is it of sufficient quality? Can I drill down to get at the root causes? Are there any health indicators that are not on the dashboard? What does the leadership team need to inform their decision-making? Is the dashboard doing its job? As a business evolves, so does its Dashboard. Priorities change, volumes vary, the business moves on so for the dashboard to remain meaningful, it must also flex and morph. The custodian needs to keep the presentation, population and integration under continual review. In reality this is not an onerous task. Summary A business dashboard does not answer all the questions, or manage the business by itself. But it does enable business leaders to make decisions. It does not have to be complicated: it just has to be right. A well-presented, automatically populated, deeply integrated business dashboard is a highly valuable business tool. Kim Dolman is Managing Director and founder of The Business InQbator which nurtures businesses as they mobilise and increase turnover by providing business planning, cashflow forecasting, funding applications and other services which releases entrepreneurs and business leaders to focus on innovation, production, sales and providing great service.