Data-driven decisions: The View from the dashboard
Decision-making in organizations is based on a complex mix of rational and intuitive thinking. Amidst abundant data, organizations find it difficult to make decisions in which they are confident. One way to help make sense of enterprise data is to use a dashboard to support business performance management.
Dashboards provide summary data from business intelligence (BI) systems so that CEOs, managers and employees can get an instant reading of key performance indicators for their organization's activities. Increasingly, the dashboards are presenting information that is updated on a daily or even real-time basis. The indicators can be in the form of speedometers, gauges, traffic lights or other graphical representations, and are often color-coded to provide red, yellow and green alerts. Dashboards are available from essentially all of the leading BI companies, and third-party companies have developed many specialized dashboards.
A dashboard developed for Novartis, using business intelligence software from Cognos, is a typical example of how dashboards can be used effectively. The drug manufacturer has a complex distribution network and was unable to see patterns in orders that would support decision-making. Using the Order Management Dashboard in conjunction with its AS400 order management system, Novartis staff can spot unusual order patterns early, allowing the company to adjust inventories. In addition, the summary data allows Novartis to assess how much product is still in transit and better predict potential return quantities.
Confidence level
In today's environment of abundant data, it might be assumed that data-driven decisions are the norm. However, a recent survey of corporate decision-makers, conducted by the Business Performance Management (BPM) Forum, indicated that only 26 percent of the organizations had a well-established, formal process for making decisions. In addition, only 40 percent of the respondents had a high level of confidence in their organization's current process for making decisions.
Moreover, a gap existed between the C-level executives and low- to mid-level managers. While 64 percent of the upper-level group had a high level of confidence in their organization's decision-making process, only 36 percent of the lower-level group held that opinion. One possible interpretation for the confidence gap between management levels is that the upper-level executives have access to better data; another is that they are intrinsically more confident.
Gaining insight into information Whatever the case, there are many indications that the decision-making process in organizations could stand some improvement. Articles abound in the business media with titles such as "Why Good CIOs Make Bad Decisions," and examples of decisions that had major adverse effects on corporations are also prevalent. Despite the overall lack of confidence, only about 14 percent of the survey respondents reported turning to a technology solution, such as planning, forecasting, reporting analysis, scorecarding or dashboarding. Some poor decisions can be alleviated by the use of technology, while others cannot.
"Having an unclear corporate vision, mission or goals was identified as a leading root cause of poor decision making," says Scott Van Camp, editorial director of the BPM Forum. "It would be difficult for a technology application to overcome this type of deficiency." Nor can it directly counteract fraud and deception, although it can make such activities more transparent.
Where technology can help the most is in the analysis and presentation of data. "Many organizations are information-rich and insight-poor," says Mychelle Mollot, VP of market strategy and strategic communications at Cognos. "They have lots of databases where information is stored, but no means to get it out and used."
The value of the dashboard is not just in the summary it presents, but also in the process through which the organization travels in order to develop it. "Dashboards are developed from the top down to reflect the strategy of the company," says Mollot. In much the same way that business process management software forces companies to make their processes more explicit, business performance management solutions require thought about what is really important to measure.
Dashboards can also be set up to show summaries of data from multiple systems that are not interoperable. That is a great advantage for organizations that want to compare data across departments; they can set up a single warehouse into which the data is delivered or even draw it directly from the disparate systems. For companies that have grown through acquisition and are trying to achieve a unified view across divisions that do not have a common IT infrastructure, that ability is particularly useful.