According to a recent study by the management consulting firm Compass, dashboard programs fail because the companies use too many metrics, leading to confusion and a waste of resources.
In order to be successful, the study identifies the three key areas of metrics selection: leadership, sustainability and flexibility.
“The performance dashboard is a popular and widely accepted business tool to gauge performance and drive improvement,” said Tom Kawamoto, an executive consultant at Compass. “While the dashboard approach can be effective, we’ve observed a number of obstacles that arise in practice.”
The selection of metrics is a common problem, as companies get too much data that do not have a specific meaning or application, the study said.
“In many instances, dashboards simply produced numbers every month that aren’t tied to anything people are doing,” says Kawamoto. “There’s no context to the metrics and nothing is done about them, so people lose interest in the dashboard. An effective dashboard uses metrics that make sense and are meaningful to stakeholders and to the business.”
The report notes that organizations tend to overly complicate dashboard systems, leaving them with an overflow of metrics and no cohesive method for bringing together data from different departments within the organization. To help alleviate that problem, Compass suggests using Microsoft Excel, a method two-thirds of study participants employed.
“Excel is a good tool to develop a proof of concept and a pilot project. As the dashboard is adopted across the enterprise, an organization can consider more sophisticated tools; but to ensure the dashboard will be accepted, it should be easy to use by all audiences,” Kawamoto said.
In terms of sustained leadership, the study suggests that successful dashboard implementation needs a senior executive who knows the business and has the authority and responsibility to turn the dashboard into a part of the management process.
The study also found that “one size fits all” does not work. Instead, it suggests using different dashboards for different audiences, as appropriate. It also identified four types of dashboards: the CEO/Board Level, which usually has 6 metrics or less; the Corporate VP/Director Level, with two major camps with 12 and 20 metrics, respectively; the IT Strategic Level, which is similar to the Corporate VP/Director Level; and the IT Operational Dashboards, which usually have 20 metrics each, though multiple dashboards are common.
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