What Are Performance Dashboards?
- By Wayne W. Eckerson
- December 1, 2005
This summer I found my 11-year-old son, Harry,
and his best pal, Jake, kneeling side by side in
our driveway, peering intensely at the pavement.
As I walked over to inspect this curious sight, I saw little
puffs of smoke rising from their huddle. Each had a magnifying
glass and was using it to set fire to clumps of dry grass as well as
a few unfortunate ants who had wandered into their makeshift
In this boyhood rite of passage, Harry
and Jake learned an important lesson that
escapes the attention of many organizations
today: the power of focus. Light rays
normally radiate harmlessly in all directions,
bouncing off objects in the atmosphere
and the earth’s surface. The boys had
discovered, however, that if they focused
light rays onto a single point using a magnifying
glass, they could generate enough
energy to burn just about anything and
keep themselves entertained for hours!
By the time Harry and Jake enter the businessworld (if they do), they will probably have forgotten this simple lesson. They
will have become steeped in corporate
cultures that excel at losing focus and
dissipating energy far and wide. Most organizations
have multiple business units,
divisions and departments, each with its
own products, strategies, initiatives, applications
and systems to support it. A
good portion of these activities are redundant
at best and conflicting at worst.
The organization as a whole spins off
in multiple directions at once without a
clear strategy. Changes in leadership,
mergers, acquisitions and reorganizations
amplify the chaos.
Organizational magnifying glass
To rectify this problem, companies need
an "organizational magnifying glass"—
something that focuses the work of employees
so everyone is going in the same
direction. Strong leaders do this. However,
even the voice of a charismatic executive
is sometimes drowned out by organizational
Strong leaders need more than just
the force of their personalities and experience
to focus an organization. They
need an information system that helps
them clearly and concisely communicate
key strategies and goals to all employees
on a personal basis every day.
The system should focus workers on
tasks and activities that best advance
the organization's strategies and goals.
It should measure performance, reward
positive contributions and align efforts
so workers in every group and level of
the organization are marching together
toward the same destination.
In short, what organizations really need
is a performance dashboard that translates
the organization's strategy into objectives,
metrics, initiatives and tasks
customized to each group and individual
in the organization.
A performance dashboard is really a
performance management system. It
communicates strategic objectives and
enables business people to measure, monitor
and manage the key activities and
processes needed to achieve their goals.
To work this magic, a performance
dashboard provides three main sets of
functionality. Briefly, a performance
dashboard lets business people:
Monitor critical business processes
and activities using metrics of business
performance that trigger alerts when potential
Analyze the root cause of problems
by exploring relevant and timely information
from multiple perspectives and
at various levels of detail
Manage people and processes to
improve decisions, optimize performance
and steer the organization in the
Agents of organizational change
A performance dashboard is a powerful
agent of organizational change.
When deployed properly, it can transform
an under-performing organization
into a high flier.
Like a magnifying glass, a performance
dashboard can focus organizations on
the key things it needs to do to succeed.
It provides executives, managers and
workers with timely and relevant information
so they can measure, monitor
and manage their progress toward
achieving key strategic objectives.
One of the more popular types of performance
dashboards today is the balanced
scorecard, which adheres to a specific
methodology for aligning organizations
with corporate strategy. Abalanced scorecard
is a strategic application, but there are
other types of performance dashboards
that optimize operational and tactical
processes that drive organizations on a
weekly, daily or even hourly basis.
Historical context: Executive
dashboards and cockpits
Although dashboards have long been
a fixture in automobiles and other vehicles,
business, government and nonprofit
organizations have only recently
adopted the concept. The trend started
among executives who became enamored
with the idea of having an executive
dashboard or executive cockpit with
which to drive their companies from
their boardroom perches.
These executive information systems
(EIS) actually date back to the 1980s, but
they never gained much traction, because
the systems were geared to so few people
in each company and were built on mainframes or minicomputers that made
them costly to customize and maintain.
In the past 20 years, information technology
has advanced at a rapid clip.
Mainframes and minicomputers largely
gave way to client/server systems, which
in turn were supplanted by the Web as
the preeminent platform for running applications
and delivering information.
Along the way, the economy turned
global, squeezing revenues and profits
and increasing competition for evermore
demanding customers. Executives
responded by reengineering processes,
improving quality and cutting costs, but
these efforts have only provided shortterm
relief, not lasting value.
During the 1990s, organizations began
experimenting with ways to give business
users direct and timely access to
critical information—an emerging field
known as business intelligence. At the
same time, executives started turning to
new performance management disciplines,
such as balanced scorecards, Six Sigma,
economic value add, and activitybased
costing, to harness the power of
information to optimize performance and
deliver greater value to the business.
These initiatives convinced many executives
that they could gain lasting
competitive advantage by empowering
employees to work proactively and
make better decisions by giving them
relevant, actionable information. Essentially,
executives recognized that the
EIS of the 1980s was a good idea but too
narrowly focused; everyone, not just executives,
needed an EIS.
Fortunately, executives did not have to
wait long for a solution. At the dawn of the
21st century, business intelligence converged
with performance management to
create the performance dashboard.
This convergence has created a flood
of interest in performance dashboards
since the year 2000. Astudy by The Data
Warehousing Institute (TDWI) in 2004
showed that most organizations (51 percent)
already use a dashboard or scorecard,
and that another 17 percent are currently
The same study showed that almost
one-third of organizations that already
have a dashboard or scorecard use it as
their primary application for reporting
and analysis of data.
The reason so many organizations are
implementing performance dashboards
is a practical one—they offer a panoply
of benefits to everyone in an organization,
from executives to managers to
staff. Here is a condensed list of benefits:
- Communicate strategy
- Refine strategy
- Increase visibility
- Increase coordination
- Increase motivation
- Give a consistent view of the business
- Reduce costs and redundancy
- Empower users
- Deliver actionable information
In short, performance dashboards deliver
the right information to the right
users at the right time to optimize decisions,
enhance efficiency and accelerate
Pretenders to the throne
Although many organizations have implemented
dashboards and scorecards,
not all have succeeded. In most cases, organizations
have been tantalized by
glitzy graphical interfaces and have failed
to build a solid foundation by applying
sound performance management principles
and implementing appropriate
business intelligence and data integration
technologies and processes.
Here are the common symptoms of less
than successful solutions:
Too Flat. Many organizations create
performance management systems, especially
tactical and strategic dashboards,
using Microsoft Excel, Microsoft
PowerPoint and advanced
charting packages. Although these applications
often look fancy, they generally
do not provide enough data or analytical
capabilities to let users explore
the root cause of problems highlighted
in the fancy graphical indicators.
Too Manual. In addition, some organizations
rely too heavily on manual
methods to update performance dashboards
that contain sizable amounts of
information. Highly skilled business analysts spend several days a week collecting
and massaging this information instead
of analyzing it.
The majority of performance dashboards
automate the collection and delivery
of information, ensuring a sustainable
solution over the long term.
Too Isolated. Some performance
dashboards source data from a single
system or appeal to a very small audience.
As a result, they provide a narrow
or parochial view of the business, not
an enterprise view. In addition, these
dashboards often contain data and
metrics that do not align with the rest
of the organization, leading to confusion
In the end, performance dashboards
are only as effective as the organizations
they seek to measure. Organizations
without central control or coordination
will deploy a haphazard jumble
of non-integrated performance dashboards.
However, organizations that
have a clear strategy, a positive culture
and a strong information infrastructure
can deliver performance management
systems that make a dramatic impact
Composition of performance
Every performance dashboard looks
and functions differently. People use
many different terms to describe performance
dashboards including portal,
BI tool and analytical application.
Each of these contributes to a performance
dashboard but is not a performance
dashboard by itself. Here is
A performance dashboard is a multilayered
application built on a business intelligence
and data integration infrastructure
that enables organizations to
measure, monitor and manage business
performance more effectively.
This definition conveys the idea that
a performance dashboard is more than
just a screen populated with fancy performance
graphics: it is a full-fledged
business information system designed to
help organizations optimize performance
and achieve strategic objectives.
An equivalent, and perhaps better,
term is performance management system,
which conveys the idea that it is a
system designed to manage business performance.
However, since the title of
this book uses the term performance
dashboards, I will stick with that term
on most occasions, although I feel that
the two are interchangeable.
Build or buy
A common question is whether it is better
to build or buy a performance dashboard.
During the past several years,
many software vendors have shipped
dashboard or scorecard solutions. Many
qualify as performance dashboards and
some do not. Until recently, most companies
built their own performance
dashboards or started with a vendor
tool and customized it extensively to
meet their needs.
Most of the companies
profiled in this book built performance
dashboards using a mix of
custom code and BI tools running on
standard corporate infrastructure components
(databases, servers, storage
systems). However, organizations that
have deployed performance management
systems within the past 2 years
have frequently used commercial, offthe-
shelf products, sometimes customizing
them extensively and, in other
Whether you plan to build or buy a performance
dashboard, it makes sense to
create a list of criteria against which you
can evaluate your solutions.
This chapter "What Are Performance
Dashboards" is excerpted from Performance
Dashboards: Measuring, Monitoring, and
Managing Your Business (0-471-72417-3, October
2005) with permission from the publisher
John Wiley & Sons. You may not make any other
use, or authorize others to make any other
use, of this excerpt, in any print or non-print
format, including electronic or multimedia.