How to build useful KPI Dashboards
How to build useful KPI Dashboards for Microsoft Dynamics
When you have precise data in an easily-digestible format, you can make actionable decisions that impact business performance. This is especially critical when you are using data from multiple sources like ERP, CRM, warehousing, or manufacturing systems. We are going to show you that through a set of tools, technologies, best practices, analytics, and business intelligence can help you start tracking performance measures and make better sense of your data – immediately.
What performance measures should I track?
It’s impossible to make a qualified decision about the direction of your business without complete visibility into your data. Many companies have a basic understanding of what reports they need to see every month from a financial and operations perspective, but there are other layers of performance measures that should be assessed and analyzed to stay on target to reach your operational business goals.
There are two types of performance measures that form the base of every analytics program: Key Performance Indicators (KPIs) and Metrics. Although you might have heard people use the terms “KPI” and “Metric” interchangeably, they are different quantifiable measurements that can impact how you set your overall strategy.
Metrics tracks the status of a specific business process. They are tactical, showing the exact performance of your business. Metrics, like IT, spend by business unit or average new deal size, are monitored regularly.
KPIs measure performance towards achieving your strategic goals or objectives. The keyword here is strategic, as KPIs show the big picture of your operations. KPIs, such as net profit margin or cost of goods sold are measured on a monthly, quarterly, or yearly basis.
When you bring both measurements together, you can start to evaluate your progress towards achieving a business goal. For example, a universal KPI used by most companies is Customer Lifetime Value (CLV). CLV can be broken down by individual customers, regions, products or salespeople and used to make decisions about sales, marketing, product development, and customer support. Metrics that go into CLV include customer churn rate, average customer lifetime value, average gross margin, etc.
Understanding what metrics support your KPIs will help you quickly respond to fluctuations and get you closer to achieving your monthly, quarterly, and yearly business goals faster – as long as you have the right systems in place. Managing KPIs and metrics with Excel is time-consuming and frankly not going to get you anywhere. This leads us to another key distinction between KPIs and metrics: the tools you need to build and manage them effectively.
How to start tracking your KPIs and Metrics
There are a few steps required to become a performance-driven culture fueled by data and insight. We are going to walk you through how to identify, create, and visualize your KPIs and metrics in a dashboard.
Identify the right KPIs for your business
Before jumping into dashboard development, you need to set measurable, quantifiable business goals. Your business or department goals are the foundation of which you will base your performance metrics on and report against. Once you have a clear understanding of what you want to achieve this quarter or year, you can start to identify what corresponding KPIs and metrics will help you meet those objectives.
One of the biggest challenges with developing goals and KPIs is making them relatable and realistic. That’s why it’s important to include your employees and managers in these bigger discussions. When employees are engaged and understand how their work relates to the company’s overarching goals, they will be more committed to using and optimizing analytics.
To get started, we recommend you keep it simple. Choose two or three priority goals and identify no more than three KPIs per goal. The goals you choose can help guide your organization’s strategic planning, performance measurement, or resource allocation – as long as the KPIs are actionable and show how you plan to get there.
Here are a couple of examples:
Start planning KPI Dashboards
Now that you have established your goals for the year and the corresponding KPIs to track, you can start planning out your dashboards. KPI dashboards are used to provide a quick snapshot of how you are performing and progressing towards your goals. With data visualizations, you can start to make comparisons, see trends over time, and see relationships between functional areas of your company.
KPI dashboards can be divided into three categories:
- Strategic Dashboards
- Track the health of a company and overall business performance.
- Used by executives and managers to identify potential issues or opportunities.
- This strategic financial analysis provides an easy way to visualize the overall financial position and performance of an organization.
2. Operational Dashboard
- Monitors business processes or outcomes that frequently change.
- Data updates regularly and often viewed by a manager multiple times a day to observe progress towards a goal.
- This report monitors the sales team’s operation and their performance, broken down by total sales, by profit, and by profit %.
- Slicers can be used to filter on regions and territories. Sales managers would likely look at this multiple times a day.
3. Analytical Dashboard
- Used to process and analyze large volumes of data to identify trends and predict outcomes.
- Typically developed and designed by business analysts.
- This dashboard analyzes the average cost, price gross profit, and sales for the items and types of items and organization sells.
- Calculate the performance of offerings over long periods of time, from hundreds of thousands of transactions, to see trends.
- This is effective for understanding the levers that impact profitability, vendor selection, billings, and more.
Examining individual and cross-organizational KPIs and metrics is much easier with a well-designed KPI dashboard. When you think about it, every dashboard is unique because it has to fit a specific need of an employee or role and match the culture of the organization. In order to make your dashboards effective, they need to be:
- Easy to read and understand
- Easy to update
- Have the ability to drill down into information
- Be visually appealing and allow for decisions to be made at a glance
It will also help if your KPI dashboards are customized to fit a specific role. A sales manager doesn’ need to see inventory data to evaluate how their sales team is performing do they? Take a look at two dashboards below, one is designed for Sales and the other is designed for Finance.
Whether you are looking at sales progress goals, it’s all about understanding your key fields and what information you need to capture in order to do your job best.
Build your KPI Dashboards with a Business Intelligence Solution
Once you have your KPIs and metrics defined for your business and a clear understanding of how to design your specific dashboards, a business intelligence (BI) solution can help do the heavy lifting for you.
Bi solutions work by gathering the most up-to-date information across your entire operations into one central location and transforming it into an easy-to-digest format that helps drive instant decision-making and process adjustments. Through intuitive, streamlined reporting and simple dashboards, BI can be used by everyone from your admin team to your executive team – giving you the tools you need to improve budgeting, support forecasting, and make better financial decisions.
To put the right information into the right hands, you can easily design and create a KPI dashboard by selecting queries and applying calculations within the BI tool itself. Most BI solutions come with a variety of pre-built dashboards and chart options. In Microsoft Dynamics ERP solutions, KPIs can be set up through Power BI or another third-party BI tool that uses a live connection to the data source, like Jet Reports.
No matter what BI solution you choose to implement, managers and staff should be able to get the answers to their questions in real-time and take action based on accurate data.
10 Best practices to building effective KPI Dashboards
- Clearly define your business goals and objectives
- Work with your entire team to align operational goals with KPIs and metrics
- Practice by choosing your priority goals and defining 3 KPIs that will help measure your progress
- Layout your dashboards by role or department to narrow down KPIs and get buy-in from other team members
- Use pre-built dashboards to help you get started designing your KPI dashboards
- Get creative with data visualizations – experiment with pie charts, pivot tables, etc.
- Take a step back and make sure your KPI dashboards align with your business goals, are easy to read, and are actionable
- Test your dashboards to make sure they are pulling accurate, up-to-date information from all your data sources (Make sure your BI solution has this capability)
- Assign control to a manager to build, update, and govern specific dashboards
- Measure progress regularly. Are these dashboards working or can we make them easier to read? Your KPIs should evolve as your business grows and changes
Simplify KPI Dashboard design with Jet Analytics
Jet Analytics is a complete business intelligence solution built specifically for Dynamics 365 Business Central. it includes a pre-built data warehouse, OLAP cubes, and dashboards, so you can begin to use it (and see the value) within a couple of hours.
In addition, Jet Analytics has a complete real-time reporting environment built-in, so you can consolidate your tasks into a single, proven platform used by over 219,150 Dynamics users. This also gives you the unique advantage of being able to report from either the live production database or the optimized data warehouse environment, giving you another dimension of flexibility in reporting while still enjoying the full power of complete analytics, dashboards, and BI.
Resource Credit | Jet Global