What Metrics Are You Looking At?
Information overload. We all feel it and yet we spend much of our waking hours with our eyes glued to either a 27, 13, 10, 6, or 5-inch screen hoping to find additional information that is both new and interesting for ourselves or useful for our businesses.
According to research performed by Forbes contributor, Bernard Marr, information creation and information access is growing at a staggering rate. Consider the following:
- More data has been created in the past two years than in the entire previous history of the human race.
- By 2020, we will have over 6.1 billion smartphone users globally (overtaking basic fixed phone subscriptions).
- Within five years there will be over 50 billion smart connected devices in the world, all developed to collect, analyze and share data.
- By 2020, at least a third of all data will pass through the cloud (a network of servers connected over the Internet).
- For a typical Fortune 1000 company, just a 10% increase in data accessibility will result in more than $65 million in additional net income.
With information growing at an ever-increasing rate company leaders can start to feel overwhelmed when faced with the question of which company data KPIs should they be paying attention to and how they use these KPIs to measure the health of their businesses.
In the business world, it is common to hear terms such as Big Data, Business Intelligence (BI), Data Analytics, and Business Executive Dashboards. What do these terms mean and how does the typical small to medium-sized business (SMB) leverage these tools?
At their core, all of these terms are synonymous and are used to describe the leveraging of technology to access and visually display a company’s data KPIs that will help interpret data points and subsequently prompt some sort of action. Yes, that’s a mouthful but consider the dozens of business metrics company leaders need to be following in order to make timely decisions and build the appropriate strategy.
A pet peeve of many company leaders as it relates to their KPIs is that they can never seem to drill down into their company’s data points to identify trends either because the data isn’t readily accessible or it is significantly out of date by the time they finally get it. The last thing a business leader neither needs nor wants is another spreadsheet with a pivot table to pour over.
The term Executive Dashboard originated from the automobile dashboard that shows the key operating gauges of a car. In fact, when you think about it, Executive Dashboards are used in much the same way as automobile dashboards. Under the hood of your vehicle, there are literally hundreds of processes that impact the performance of the vehicle. The automobile dashboard gauges in your car tell you things like:
- •Rate of Speed
- •Gas MPG
- •Engine Temperature.
- •Gas Tank Level
- •GPS Directions
An Executive Dashboard functions like the gauges in your car but will reveal business KPIs in “real-time” like:
- Revenue MTD, vs. Target, Growth Rate YOY
- Profitability MTD, QTD, YTD
- New Customers Acquired/Geography
- Cash Flow Forecast
- Cost Per Lead – Click Through Rate – Conversion Rate
- Many More
Simply displaying a company’s KPIs on a large monitor in the hallway or via an app on your phone is not enough to build an analytic culture within a company. Harvard Business Review contributor, Shvetank Shah, touched on this in his article titled, “Good Data Won’t Guarantee Good Decisions.” Mr. Shah states that “Companies that want to make better use of the data they gather should focus on two things: training workers to increase their data literacy and more efficiently incorporate information into decision making, and giving those workers the right tools.”
Sounds like good advice to me.