BusinessWeek Magazine has provided a great article on why CEOs should be using dashboards. How they will provide a better understanding of where a company stands and save valuable time.
It was New Year's Eve, 2003, and Oracle Corp. (ORCL) CEO Lawrence J. Ellison was on his honeymoon. He and his bride, romance novelist Melanie Craft, were relaxing on his 243-foot Katana yacht off St. Barts, the Caribbean island known as a haven for movie moguls and rock stars. But Ellison, for the umpteenth time, couldn't help himself. He climbed to his office on the upper deck of the Katana, fired up his computer, and logged on to the Web site of a small company called NetSuite Inc. It was the last day of the fiscal year, and Ellison, the co-founder of NetSuite and its largest investor, needed to know if the startup was going to meet its numbers.
Before the Internet, Ellison says, taking the pulse of a company was sort of ridiculous. To get the latest sales information, he would call several people and wait days for them to process financial reports that often were out of date by the time he got them. "You would use your cell phone and work on feelings," he says.
But thanks to a new Web-based management tool known as a dashboard, Ellison had the information he needed in seconds. Like the instrument panel in a car, the computer version displays critical info in easy-to-read graphics, assembled from data pulled in real time from corporate software programs. Logging on to his dashboard for NetSuite, Ellison reviewed the financial data and saw surprisingly strong sales. He quickly called NetSuite CEO Zachary A. Nelson. Recalls Nelson: "The first thing he screams is: 'Are the numbers on my dashboard right?"' Nelson looked at his own dashboard, but his sales data were lower. So he pushed a refresh button. "The information came up with the new orders, and it was the exact same number," says Nelson. "It was a very big high-five call."
Since the advent of the mainframe in the 1950s, companies have dreamed of using computers to manage their businesses. But early efforts came up short, with technology that was too costly or too clunky. Now, thanks to the Net and dashboards, those dreams are starting to come true. Forrester Research Inc. (FORR) analyst Keith Gile estimates that 40% of the 2,000 largest companies use the technology. Some of the most prominent chief executives in the world are believers, from Steven A. Ballmer at Microsoft (MSFT) and Ivan G. Seidenberg at Verizon Communications (VZ) to Robert L. Nardelli at Home Depot (HD). "The dashboard puts me and more and more of our executives in real-time touch with the business," says Seidenberg. "The more eyes that see the results we're obtaining every day, the higher the quality of the decisions we can make."
The dashboard is the CEO's killer app, making the gritty details of a business that are often buried deep within a large organization accessible at a glance to senior executives. So powerful are the programs that they're beginning to change the nature of management, from an intuitive art into more of a science. Managers can see key changes in their businesses almost instantaneously - when salespeople falter or quality slides - and take quick, corrective action. At Verizon, Seidenberg and other executives can choose from among 300 metrics to put on their dashboards, from broadband sales to wireless subscriber defections. At General Electric Co. (GE), James P. Campbell, chief of the Consumer & Industrial division, which makes appliances and lighting products, tracks the number of orders coming in from each customer every day and compares that with targets. "I look at the digital dashboard the first thing in the morning so I have a quick global view of sales and service levels across the organization," says Campbell. "It's a key operational tool in our business."
The technology is particularly valuable to small companies, since most of them couldn't afford sophisticated software in the past. Up until about five years ago, dashboards had to be custom built, so the expense could run into the millions of dollars. Now, NetSuite and others offer products that run $1,000 to $2,000 a year per user. "NetSuite brought on a total change in the way the company works and thinks," says Nate Porter, vice-president of American Reporting Co., a Kirkland (Wash.) provider of credit reports and other mortgage services.
Still, dashboards have drawn some flak. Critics say CEOs can miss the big picture if they're glued to their computer screens. GE agrees with that point. While business unit chiefs such as Campbell are active dashboard users, CEO Jeffrey Immelt is not, since he focuses on issues such as broad strategy and deal making that the technology can't yet capture.
Other critics fear dashboards are an alluring but destructive force, the latest incarnation of Big Brother. The concern is that companies will use the technology to invade the privacy of workers and wield it as a whip to keep them in line. Even managers who use dashboards admit the tools can raise pressure on employees, create divisions in the office, and lead workers to hoard information.
One common concern is that dashboards can hurt morale. Consider the case of Little Earth Productions Inc., a Pittsburgh clothing manufacturer. The company uses NetSuite's tools to monitor the amount of business each salesperson has brought in and then displays it publicly. "You do feel bummed out sometimes if you are low on the list," says Ronisue Koller, a Little Earth salesperson.
Those pressures can lead to even bigger disruptions. NetSuite CEO Nelson says his dashboard allows him to read every e-mail sent by the sales staff and to inspect the leads of each salesperson. "It's frightening," he says. And it can have serious consequences. Once a month, Nelson plays "lead fairy" and looks at what sales leads have been followed up on and which ones haven't. One salesman quit when Nelson wrested away his sales leads that were not being used and gave them to others who were out of leads. "This raised enormous hackles in the company," says Nelson. "That's fine with me because he wasn't doing his job anyway."
Still, most management experts think the rewards are well worth the risks. They caution that executives should roll out the systems slowly and avoid highlighting individual performance, at least at first. They also underscore the need for business leaders to spend time up-front figuring out which metrics are the most useful to track. But that's a question of how to use the technology, not whether to implement it. "You can't manage something you can't measure," says Ken Rau, managing partner at Bay Area Consulting Group LLC in San Francisco. "Dashboards are one of management's key techniques to make sure an organization is performing according to its objectives."
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Source: Bloomberg BusinessWeek.