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TDWI Upside - Where Data Means Business

From Information to Action: Exploring the World of Information Dashboards

Think you know how to build an information dashboard? You’d be surprised how many dashboards are not effective, says Rich Fox, analytics consultant and educator. He offers insights into dashboard design, requirements gathering, and data visualization best practices.

In a TDWI “Speaking of Data” podcast earlier this year, Rich Fox discussed the ins and outs of information dashboards. Fox has almost 25 years of experience with data and analytics, both as practitioner and as a consultant and educator. [Editor’s note: Speaker quotations have been edited for length and clarity.]

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Fox explained that his interest in BI and analytics began during his time as a CFO for a real estate company in southern California. “I was frustrated when we would present at the quarterly board meetings and the board would ask why the KPIs were moving the way they were. I had difficulty answering them because I was spending so much time with financial statements and data that I wasn’t getting into the operational drivers.” This led him into BI and analytics, which he has continued with to the present.

For Fox, educating others has been a key part of his continuing practice. He teaches a graduate program at San Diego State University and works closely with the finance and accounting community, including the American Institute of CPAs, who asked him to help determine the best way to incorporate analytics content into undergraduate finance and accounting courses.

Fox is also a frequent instructor for TDWI conferences and seminars. In April of 2023, he led a three-day seminar on BI, with a focus on designing effective information dashboards.

“One might ask why we need a seminar on dashboards when companies have been building them for years,” Fox said.” Unfortunately, many of those dashboards are not very effective.” He explained how analytics can help businesses perform better by helping them answer three questions:

  • How are we performing?
  • Why is that happening?
  • What should we be doing to improve performance?

Of those three, Fox said, the “why” is the most important. Until you understand the root cause of a situation, you can’t decide how to improve it. That understanding requires seeing the operational drivers behind your KPIs -- most of which are finance related. Fox offered an example.

“If you want to understand why sales are not growing as you’d like them to, you don’t get that answer by analyzing sales data. You get it by analyzing the drivers of sales, such as customer satisfaction, complaints and claims, and product returns.” This means an effective dashboard must connect these drivers to the KPIs so users get the information they need to make decisions.

Another feature of the seminar is a deep dive into the balanced scorecard concept created by Drs. Kaplan and Norton of Harvard University back in the 90s. A key aspect of the balanced scorecard is its emphasis on leading indicators rather than lagging indicators. “Most financial KPIs are lagging indicators (e.g., last month’s sales figures). Leading indicators are ones such as customer satisfaction or customer lifetime value or are related to internal business processes.”

Another concept that came from Kaplan and Norton’s work was the idea of grouping KPIs into four categories they called perspectives.

  • Financial
  • Customer
  • Internal business processes
  • Learning and growth

Enterprises would then develop strategy maps to connect these different perspectives and their related KPIs.

The goal of all this, Fox explained, is to provide the business with actionable insights. This begins with effective requirements gathering -- another course in the seminar. “What does the business need? What is the business question you’re trying to answer? How does it relate to your business strategy?”

Today, data and analytics teams need to work closely with the business to drive performance in all the different functional areas. We talk about the Five Why’s -- a simple concept for finding the root cause of a situation. Ask “why” five times and you will usually come to the source of the situation. “Often, someone will come to the data team and request a dashboard when there’s another solution to the question they’re trying to answer, so it’s really important that your requirements-gathering process look deeply into the problem.”

The seminar also included a full-day workshop on data visualization theory and best practices. Recent innovations in advanced data visualizations, such as tree maps and chord diagrams, make it possible to convey information in much more interesting ways. However, Fox emphasized the question is always, “What is the most appropriate way to provide the answer the business is looking for?”

[Editor’s note: Mr. Fox will be teaching the course “Building Your Analytics Strategy for Data-Driven Results” at TDWI’s San Diego conference in August, 2023. For those interested in attending this seminar, TDWI will be offering it again in September, 2023. ]

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