In his classic book How to Win Friends and Influence People, Dale Carnegie tells the story of how Charles Schwab increased productivity in an underperforming mill by 67 percent in a single day. At the end of each shift, Schwab used a piece of chalk to record a single number on the plant floor. That number represented the total quantity of items produced by the previous shift, and it sparked a friendly competition between the employees at the plant to see which shift could achieve higher production numbers. Results increased instantly and dramatically.
Today’s businesses may require a more sophisticated approach than that, but the lesson holds true. When everyone in the organization aligns around the same objectives, good things happen.
A popular analogy compares the power of the sun to that of a high-powered laser beam, noting that the sun produces an immense amount of energy, but because it is so widely dispersed, human beings can tolerate (and even enjoy) exposure to direct sunlight. A powerful laser, on the other hand, emits a tiny fraction of that amount of energy, but it is so focused that it can be used to start a fire.
Business leaders, likewise, recognize that when an organization has a few clearly defined, measurable objectives–and when it consistently monitors performance against those objectives–it enables the business to stay on track to achieve its primary goals. Business intelligence (BI) dashboards have grown very popular over the past few years as a means of communicating key organizational objectives and tracking performance against them.
BI dashboards provide a vivid visual representation that can be intuitively understood by virtually anyone in the organization, very quickly. For strategically focused businesses, BI dashboards are an effective means for communicating performance against key performance indicators (KPIs), helping to keep everyone on the same page. For finance leaders in particular, dashboards provide a way to communicate very effectively to a non-financial audience.
Why Use a BI Dashboard?
One of the most common use cases for BI dashboards involves tracking sales revenue and pipeline opportunities against the forecast. That is often presented alongside other key customer metrics such as returns, on-time deliveries, and so on. It is an example that virtually anyone in the organization can understand, and it is highly relevant to C-suite executives and others throughout any business.
For finance and accounting professionals, however, it is worth considering some use cases for driving awareness of other key financial measures across the entire organization. Some of the most important financial metrics are hard for non-financial audiences to grasp intuitively. This is where dashboard visualizations can be especially useful.
The most fundamental levers of business effectiveness ultimately revolve around working capital. In 1999, S.L. Mintz wrote; “As levers of financial management go, none bears more weight than working capital. The viability of every business activity rests on daily changes in receivables, inventory, and payables.”
Organizations that manage working capital effectively are able to consistently outperform those who do not. Getting the rest of the organization to internalize key working capital metrics, on the other hand, can be a challenge.
Metrics such as the “cash conversion cycle ” (CCC) and “days working capital” (DWC) provide high-level indications of how well the organization is performing. At the next level of detail, “days sales outstanding” (DSO), “days payables outstanding,” and “days inventory outstanding” (DIO) provide meaningful ways to quantify the effectiveness of routine operational functions. These are the metrics that people can directly impact in the course of doing their jobs every day.
Unfortunately, most people don’t grasp that kind of numeric information intuitively, and as the old saying goes, a picture is worth a thousand words. That’s where BI dashboards can be extraordinarily effective. Business leaders have the power to drive higher performance by clearly delineating the numbers that matter most, communicating those throughout the organization, and regularly publishing performance results in a format that everyone can understand.
BI dashboards are the single most important ingredient in making that happen.
BI Dashboards in 2021 and Beyond
BI dashboards have grown in popularity as software technology has evolved to provide faster, more powerful tools for summarizing and presenting business information. In order to work with larger data sets, to work more efficiently, and to develop dashboards quickly and accurately, a robust toolset is required. Let’s consider some of the features to look for when you consider a business intelligence solution for your organization:
- Visual richness: Good dashboards present information in a way that is meaningful to the intended audience. They provide the appropriate amount of information, not too much and not too little. In addition, good dashboards are configurable to the unique needs of each user.
- Proactive real-time alerts: Like warning lights on the dashboard on a car, a good BI dashboard will alert users to situations that require immediate attention. By tracking information in real time and immediately calling attention to exceptions, a good dashboard can help business leaders address problems as soon as they appear.
- Collaboration: Delivering information to the right people in the organization is only the first step. Collaboration features enable discussion and problem resolution with searchable, sharable content. Relevant conversations can trigger proactive alerts to the right people in the company, making it easier to work together effectively.
- Prediction: Although the term “dashboard” implies a focus on past and present conditions, the most effective dashboard solutions provide rolling forecasts and predictive analytics, making it possible to see the road ahead with greater clarity.
insightsoftware provides powerful business intelligence tools, including dashboards and collaboration tools. We enable faster, easier, and more affordable business insights, with integration to over 140 different ERP systems and other enterprise applications. To learn more about how your organization can leverage the power of BI dashboards, contact us today to request a free demo.