The question is how to create an informative report, convenient for decision-making, supporting the principle of “saw – understood”? The report is convenient if with minimal effort the user of the report receives at his level all the necessary information, not the maximum information, but exactly the necessary, and nothing extra… I imagine the report as a “widget” on a “gadget”, with good visualization, infographics)) At the same time, everything that needs to be seen and analyzed is available to the user in one “click”. And on this note, we return to the capabilities of the QPR tool, let’s see how it supports the KPI management system – the KPI planning and reporting system. “Reporting and dashboards” is a continuation of the topic started in the articles “BSC automation using QPR Suite 2012. Part 1: strategic map of the company” and ” Part 2: features of the BSC/KPI automation project “.
Automating management by goals and KPIs is not difficult, it is a completely solvable task – we define the goals (why we need it) and the requirements for the system from different groups of business users, agree on the project plan, budget and implement the plan. After the system is implemented, we keep the goals and KPIs up to date within the planning and control processes, ensure the reliability of the data, personalization of responsibility for all goals and indicators. Just… There are, of course, various nuances, but this is already a dive into the topic – how convenient and intuitive is the system interface for users, what methodological rules are “hardwired” into the system, etc., including problems with the quality of goals/KPIs, which are due to factors of business maturity, management styles, planning and reporting traditions. Quality factors can minimize the effect of using the BSC/KPI approach, especially the corporate culture factor. One CEO put it quite aptly and caustically on this matter: “culture eats strategy for lunch.”
Also, as in previous articles, I plan to consider several methodological issues that inevitably arise when implementing any system. Solutions to methodological issues in projects sometimes force us to reconsider the company’s established management traditions and customs, to pay attention to the “irrational” absurdities of established management traditions and rituals.
Let’s look at an example. From observations, different companies often do not see the need to distinguish between the indicators of management objects and the indicators of events that need to be implemented to transfer the management object from state A to state B. It may seem complicated at first glance, but in fact everything is simple, see Fig. 1.
Fig. 1. Two main types of indicators: management object indicators and action indicators.
Strategic indicators are always key indicators of key management objects. An example of a key indicator is % of assortment renewal, where the management object is assortment. To achieve the goal, we may have to build a tender procurement system, formulate criteria for selection/revision of relations with suppliers, etc. – but all of these are important tasks/events, the implementation of which must also be under control.
I propose to separate 2 systems of indicators: 1) control of indicators of management objects, and 2) control of indicators of events. The systems are interconnected in content, while the substitution of one for the other will inevitably and inexorably lead to the effect of “strategic fuss” – frequent revisions, frequent adjustments and updates of indicators of actions, events. Very interesting for analysis are 2 situations – 1) indicators of projects, plans are fulfilled, but strategic KPIs are not achieved, 2) target values of strategic KPIs are achieved, but indicators of strategic projects and plans are not fulfilled …))
Different tools are used for different control systems. For situation 1 (control system for the indicators of management objects) — we use BI systems, KPI systems, for situation 2 — we use a control system for tasks, plans, events, projects using task management tools (EDMS, electronic document management systems), project management tools, request tracker, service/help desk. To control the implementation of strategic projects — project management tools, to control the implementation of operational action plans — EDMS, Help Desk.
IT systems help to record technology, algorithms, methodological rules in management practice, not to leave a chance for unnecessary, abstract creativity, to minimize cases of non-compliance with corporate rules, in particular, to ensure correct work with indicators – to separate indicators measuring the state of management objects from indicators measuring the implementation of events, projects. For example, in QPR, the category “actions” is used for events, in Volgasoft – “smart tasks”.
The low quality of strategic goals and indicators is expressed in the fact that in the end, when the fact is calculated, the indicators turn out to be uninformative, do not allow making management decisions, and questions like: “so what?”, “what is the point?”, “how will this be used in the future?” – sometimes remain without a clear, practically useful answer. I will give an example of an indicator that is encountered in practice, creates only the appearance of control and has limited usefulness – these are indicators of the “yes / no” type. “Yes” – the event has occurred, “no” – the event has not occurred. This type of indicators is used for important tasks-events (approve a new motivation system, renew a license). It is important for us to see a strategically significant indicator in dynamics, we look at the statistics of its values, compare the plan with the fact for reporting periods, the fact with the fact for similar periods of different years – and this allows you to make a decision, understand something, or ask yourself a new useful question for further search for the problem. Statistics of 3 “yes” and 5 “no” will not bring any benefit. If there is a goal, to enter a new market. What is the point of measuring it in the “yes/no” style, if you can measure the actual results of entering a new market – sales, the number of contracts concluded, the number of clients. The indicators are selected in accordance with the criteria that measure the essence of achieving the goal, or, more precisely, the indicators are selected from business processes, the implementation of which leads to achieving the goal.
The system of plans and reporting can be built conceptually, having defined the centers of financial reporting, centers of income/costs, or from practice and common sense. At some point, there is a need to move to complex reporting (not only financial and natural indicators) on more advanced tools. The growth of business scale, mobility, speed encourage us to look for new solutions. It is impossible to improve what we do not see, do not measure on a regular basis.
QPR allows you to create dynamic electronic booklets and dashboards. A dynamic report involves automatic reflection of current data and sliding by periods, i.e. we always see the plan/forecast/fact for the current period (period t), the plan/fact/% of performance of previous periods (t-1, t-2, t-3, …), and the planned/forecast values of future periods (t+1, t+2, t+3, …). If the system of indicators is deployed for all heads of departments, then, as a result, we get a single tool for measuring the efficiency and effectiveness of the holding, companies, heads of departments of specific companies/business areas. Each manager, employee, within the framework of their access rights, receives a web interface for planning and monitoring important indicators for their area of activity. Physical access to the interface is a link to a site that requires authorization.
The pages of the electronic dynamic report (booklet) in QPR may look like the ones shown in the examples (Fig. 2, Fig. 3, Fig. 4) – indicators of the company “BE_3”:
Fig. 2. Dashboard of financial indicators of the company BE_3
When generating electronic reporting forms, we can rely on the BSC methodology and place a company’s strategic map, strategic KPIs of top managers, and heads of departments on the report pages. It is important to compare different indicators, which can initially be generated in different accounting and reporting systems. For example, we can compare not only financial indicators, but also indicators from the areas of marketing, production, IT, HR, business processes (service maintenance, call center work, etc.). This opportunity gives a voluminous 3-D (4-D …) idea of the state of affairs in the company. Of course, for this purpose it is customary to use BI tools (Qlik View, SAP solutions, Oracle, etc.), but this is the way for “mature” companies with large warehouses and large data arrays. At the early stages of management practice, when there is a problem of data shortage, it is important to be able to manually enter indicators, quickly set up a model of goals and indicators. At subsequent, mature stages of management practice, there will be another problem – too much data.
Fig.3. Dashboard for decision makingComparison of indicators is either an act of creativity (the art and intuition of management), or business logic, or more precisely, the logic of business processes (individual issues of the connection between the process approach and the balanced scorecard are covered in the article “ How is the process approach useful for using the balanced scorecard? ”).
It is useful to display a list of process indicators on the dashboard that characterize the efficiency of the company’s key business process. For example, the state of the sales process will be clearer if you display the sales funnel indicators on the dashboard as a whole, and in different sections, by employees, by products, by types of clients:
- Number of accepted incoming calls from new clients
- Number of meetings per 1 new client
- Number of signed contracts
- Number/amount of invoices issued for payment
- Amounts of overdue, unpaid bills
Fig. 4. Dashboard of indicators: “saw – understood” or asked a question on the subject Data visibility is politeness and respect for the time of management reporting customers!
