Businesses improve reaction times through active dashboards and scorecards.
Strategy execution is always the No. 1 priority of executives, assuming organizations have a good plan and processes to translate strategies into organizational goals. Monitoring strategy execution requires current, accurate data to populate scorecards or dashboards to detect anomalies and business-impacting trends quickly so corrective action, if needed, can be taken.
One approach for improving strategy execution is to use an active enterprise data warehouse (EDW) approach to drive “active dashboard or scorecard” efforts. By focusing on key performance indicators (KPIs) based on real-time operational data, employees at the strategic, tactical and operational levels of an enterprise can see how the business is performing and react appropriately.
Top to bottom
Building a metrics-oriented culture within a company isn’t easy. Best-in-class enterprises take a disciplined approach to move from strategy to cascaded objectives for business units and work groups that align employee activity from top to bottom. They also focus on usability. A survey by The Data Warehousing Institute (TDWI) shows drillable dashboards and scorecards as the top need for “casual users,” a category that includes most employees.
Often, companies start with dashboards that display financial metrics, or with Kaplan and Norton Balanced Scorecards to give equal weight to non-financial metrics, including critical process measures, employee training and morale, and customer satisfaction and loyalty.
One bank, for example, uses a scorecard with its EDW to measure strategic objectives throughout the organization, from the individual bankers at each branch to the company as a whole. This approach enables managers to set objectives with their staffs and track the attainment of those goals with each subsequent scorecard calculation. Using Kaplan and Norton Balanced Scorecard dimensions, users can run queries to drill into detailed data on customers, products, channels, accounts and transactions.
These comprehensive, drillable results are very useful, even when the bank publishes them monthly. This raises the question, though: Why not provide daily or continuous updates? After all, with active dashboards and scorecards, it’s entirely possible.
Drive to active dashboards and scorecards
Successfully deploying an active dashboard or scorecard initiative requires a phased approach:
Step 1. Start with an EDW platform. The EDW was designed to provide an integrated, single location for information. That’s a prerequisite for easily building dashboards and scorecards. Adding “active data”—refreshed data delivered more quickly than the overnight batch cycle—makes this single view of enterprise information even more valuable. It means that drill-downs to the finest details are always up to date and available to everyone with a need to know.
Step 2. Choose an easy-to-use display technology that can be implemented throughout the enterprise. Many vendors offer modern dashboards and scorecards that interact with databases using structured query language (SQL). Choose your favorite and standardize its training and use. These steps—one source of data and a standard access tool—are prerequisites to the remaining steps.
Step 3. Decide which KPIs to use. This step is harder than the rest because of the many options. There’s even a Web site, kpilibrary.com, that offers more than 2,300 recommendations. The key question is: How do you find the most valuable KPIs—the handful that will drive your organization to reach new heights of profitability? This remains more art than science, but over time it will be considered a core competency to find the best KPIs by conducting “database forensics.”
This means back-office workers must become discoverers of business drivers. Using business intelligence (BI) tools with the active EDW, these employees can more easily investigate what pushes KPI values up or down. In addition, these forensic scientists need to find the leading (versus lagging) indicators that are predictors of business growth.
If a company has a KPI on the number of customers, then its end-of-quarter total will be influenced by the numerous upstream activities it does (or does not do) to acquire and retain customers. Suppose we drill down into customer retention. Compelling insights can be uncovered by examining the behaviors of those who “quit” a company:
- A bank might find that credit card holders stop paying their bills in full, switching to minimum payments in the months before they depart.
- At a telco, subscribers’ calling patterns might change or dramatically decrease.
- Other industries might learn that at-risk customers often dispute bills or leave the Web site to check out the competition.
In each case, these upstream event-based clues may be leading indicators for downstream impacts on a business. By gathering customer behavior data in one place, strategic analysts have a better shot at performing database forensics to detect the right set of leading indicators. And the faster they’re discovered, the better, which is the essence of active strategic intelligence.
Step 4. Parlay insights into action. Active operational intelligence is about connecting the insights associated with these clues with front-line systems. To retain their best customers, top companies roll out targeted retention campaigns through front-line channels. So if a high-value individual who is at risk of churning hangs up after being put on hold by the contact center, the company knows to call back immediately. Or if subscribers drop their service, an organization may launch specific efforts to win them back later that day, not later that week. Time is indeed money. The more quickly an enterprise can detect operational events and interpret those in the context of strategic insights to take action, the more rapidly it can react to push the appropriate levers to achieve business goals.
Step 5. Evolve over time. Active dashboarding and scorecarding is a process. The set of KPIs is always changing, so periodic monitoring of the effectiveness of actions and the utility of KPIs is required.
Take the lead
So how does an organization get started? Driving to better execution requires leadership. An enlightened database administrator (DBA), someone who recognizes the possibilities and drives the enterprise to use its data warehouse in this new way, may be the starting point. But that DBA will need help.
In the best cases, the CEO drives the process. For companies without a metrics-oriented CEO, senior management team or a high-powered sponsor, the finance organization can often lead the way. Finance is well-positioned to help consult and drive better KPIs because it typically:
- Is integrated throughout an enterprise and thus has a big-picture view
- Espouses the idea of a single vision of the company
- Is experienced with cross-department activities
- Has members who are metrics- and detail-oriented by training
- Can settle disputes over metadata definitions
- Has leaders who increasingly seek to move away from accounting and into performance consulting
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With the right leaders and goals in place, an enterprise can launch a successful active dashboarding or scorecarding project by allying the strategy team with business unit leaders. Often the human resources department needs to be involved to address training and cultural issues. The key is to establish an initial game plan and test it. Many organizations with EDWs have the right technologies in place already—they just need to “go active” by loading data intra-day; implementing KPI calculations, alerts and triggers to send out e-mails or update displays when exceptions occur; and building an ongoing process to monitor and improve what’s measured.
In the end, the technology for active dashboarding is fairly straightforward, so all it boils down to is
leadership and initiative.