Tue, Aug 26, 2008

Data that Everyone Understands

In today's world of information overload, humanizing numbers is a necessity.  If done properly in the form of visual elements that the average human can process, understand and view, the potential for business performance improvements is beyond our imagining. Visual dashboards are a simple way to see, analyze and forecast using data. However, you need to know what a dashboard is, and more importantly, what should be on a visual dashboard.

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“We constantly receive requests for dashboard reporting from managers. When we ask those managers what they want to see on their dashboard, they can't tell us. How can they expect IT to create dashboards if the managers can't articulate their needs?”

--Healthcare CIO

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A visual dashboard is one that not only tells you what has happened in the past, but one that also tells you what is going on right now. Most importantly, it can help you visualize and predict what will happen in the future based on available data combined with assumptions about the future. The assumptions require knowledge of past performance, current performance, as well as demographic and trending data.

It sounds simple enough, and it should be if you understand your business, have access to “accurate” data, and have the right talent available to help you use the information, format the dashboards and actively use them. However, there are frequently challenges associated with creating effective dashboards as we outlined in the article “Data Defines Business Results”.

Picking the Right Key Performance Indicators

Knowing what to put on a visual dashboard is critical. Data for the sake of data, which we have all heard before, is not the answer. So how do you identify what information should be on yours? You have to understand your business. You also have to be willing to use a combination of intuition and analysis to figure out where you should be looking for data.

For those of you that are thinking “Intuition does not come into play here”, I can assure you that it does. As noted by the CIO earlier, you need to know what belongs on the dashboard before any work can start. That's where the business subject matter experts come in. Someone who understands the business can provide a starting point. It's much more effective than having an analyst or a programmer who does not understand the business attempt to create a dashboard based on unknown expectations. The business subject matter expert can provide intuitive guidance regarding what is most important to the success of the organization and what metrics can be meaningful. If you need further convincing on this matter, I'd suggest that you read the book “Blink”, which is all about how your brain intuitively recognizes things based on a collection of knowledge.

Intuition alone will not resolve the challenge. You may also be in a situation where nobody has the intuitive ability to quickly find a starting point. In these cases, it's best to use some classic key performance indicators or scorecard metrics to get yourself started.

Process related metrics are frequently a great place to start looking for data that can be used to create visual dashboards. By following standard Six Sigma practices, or for 90% of the world that has not been trained in those practices, simply mapping out your process, looking for areas of issues and focusing on those that have the biggest negative or positive impact on the performance of the business is effective.

Turning Data Into Business Intelligence

How can you turn your data into a well thought out set of charts and key performance indicators that can not only tell you where you have been, but show you what is going on right now, and help you predict what will happen in the future?

Consolidating your key metrics is a necessity. It would be great if they could all be in one software system that is already linked to your data. But that's not usually the case. Even your personal computers frequently have different databases housing information that is in different software systems. The challenge is multiplied as you scale the size of the organization, some of which have 20 or 30 major software systems running on different hardware environments. We're not going to solve those challenges here. However, we can discuss some tools that are available to make the creation of visual dashboards possible.

For most of us, Excel is a readily available tool for creating dashboards in Excel. It's a great way to consolidate large quantities of data from different systems and make them into charts that are meaningful. It's impressive to see such complex dashboards being created in a tool that is so readily available. Of course, you do have to have the skills required to create them. A great example of a dashboard can be seen on the BonaVista systems web site. Take a look at the following link: “2008 Excel Dashboard Competition”

Excel is certainly a very effective way to test the waters with visual dashboards since it's readily available and low cost, particularly if you are a large organization looking to provide useful data to senior managers and line managers sooner rather than later. But there is so much more out in the world. It's also worth noting that a dashboard does not need to include every major piece of data for the overall organizational performance. A business unit, even a department can use a visual dashboard to focus on areas that are critical to their situation, including people performance, quality, and customer satisfaction.

If you can use that regional or segment level data at the senior level, it's possible to make great comparisons between like businesses in different regions. One example would be a dashboard that high-lights revenue, profit, customer satisfaction, and related metrics over time, that compares different regions of retail stores. Variables, like the impact of learning and development programs on those key metrics, can be viewed from a past, present and future perspective to understand the benefits of organizational change. By doing this, it's possible to evaluate whether or not further investments in training will be beneficial and to what extent. Every organization is unique, so simply think of your key metrics, and the cause and effect relationship that your investments will have on them when considering your dashboard.

Some Vendors of Note

Visual analytics and dashboards come in many forms, and the focus can be all over the board. Sonar6, for example, provides performance management software that allows you to visualize how employees are trending, up or down, in terms of individual performance. It also allows you to see where the various team members are in terms of growth potential. It's all great information, on a very focused scale that allows you to manage your most valuable asset in order to keep people on task with the organizations goals and ensure that your future is secure with long term employees and future managers. What's missing is the link between key business performance indicators and the individuals performance. This challenge is not unique to Sonar6, but it's worth noting that there should be a link between people performance and organizational performance relative to analytics.

Truly useful dashboards are those that show you more of a cause and effect relationship. An up and coming software firm in the world of business analytics is Tableau Software based in Seattle. They have some excellent examples of what dashboards can look like on their web site, and you can even download a trial copy of their software to test the system out. However, please note that the examples that they display generally show what has happened, and what is happening right now. One example of a comparison of using SAT scores vs ACT scores to predict GPA can be used to create trends, but in their case, it is showing the relationship of the prediction based on what already occurred. Again, not an ideal state for what we are talking about here. That's not to say that their application and others like it can't be used to create complex forecasts and much more interactive visual dashboards.

The future looks bright for Business Intelligence. However, until there is truly a demand for business intelligence, the software vendors won't be spending a great deal of time creating them. Instead, they will continue to provide visual reports, which is most of what you see available today. And just to clarify the difference again, business intelligence uses analytics to understand data and predict the future. Most dashboards in use today can't be classified as business intelligence in that regard. They are simply visual reports.

Below, in no particular order, is a short list of some general vendors that seem to have the potential to provide great visual analytics:

- Tableau Software

- Dundas Data Visualization

- Business Objects/SAP

- Cognos/IBM

- Microstrategy

- Essbase/Oracle

- Excel/Microsoft

Interestingly enough, I asked many of the software firms in the market place if they had a great example of a business intelligence dashboard that integrated human capital performance with business results. Not one of them was able to provide a meaningful dashboard in this regard. As a note to the vendors, you're missing an opportunity. As a warning to potential customers of these and the hundreds of other business intelligence tools in the market, just because they have the potential to provide great analytics, does not mean that they have the “knowledge” required to make it a reality for you.

That's where niche expertise comes in as we all know. As much as many of the IT departments of the world would like to operate on one system with one set of experts, it's simply not possible today. As a result, specialty software companies and consultancies are capable of providing guidance and deliverables that are specifically focused on your needs when it comes to visual analytics. There are so many vendors in the market today, we won't even begin to address them all, but will note a few that are making some great headway in the area of HR Analytics. The firms listed below have tackled a small analytics niche related to workforce planning. It's important to note that the roots of all of these companies started with consulting and moved to software.  I note this to high-light the fact that although there are hundreds of software vendors in the market that could provide workforce planning analytics, it takes a subject matter expert to do it effectively:

- Vemo Inc.

- InfoHRM

- Aruspex

These vendors are notable in the world of human capital management because they are working to help organizations identify what they should be tracking and analyzing for their unique environment in order to maximize business results related to workforce planning. But there is plenty of room to grow in this emerging world of human capital analytics since most of these vendors have yet to bring human capital and business analytics together. The true value of business intelligence comes from being able to see what happened, what is happening now, and what could happen in the future as it relates to people and business.

Building Your Dashboard

Human resources must collaborate with business leaders on what is most important to the organization in order to effectively build a meaningful set of visual analytics. This will be a unique process for every organization, but some basic principles remain the same.

Linking human capital and business measures requires that you understand what is important to your business. According to a recent DDI survey, global executives top business priorities include:

1. Improve or Leverage Talent

2. Business Growth

3. Improve Customer Relationships/Service

Given the fact that those three items are top of mind for global business leaders, it stands to reason that those same leaders will react very positively to anyone that can help them correlate the inter-relationships between their most expensive asset, people, and their key priorities. If you're looking for project funding and advancement, it's in the numbers.

References

(1) DDI, Global Leadership Forecast 2008/2009