How to Build a KPI Dashboard in 4 Steps

Last Updated: Wednesday, September 19, 2012 by Johnathan Briggs

Building a KPI Dashboard for a business or department is often a task where managers are unsure where they should start. They often jump straight into the visuals without considering some more important aspects and as result end up wasting a lot of time and having unsuccessful corporate dashboards.

This short post is aimed at providing you a quick guide to the process of building a successful online KPI dashboard.
For a more detailed 50-page report please download 12 Part KPI Dashboard Best Practice Guide

1. Selecting Your KPIs

KPI stands for Key Performance Indicator. This means that out of the many measures and metrics we have for our business a few of these provide us with early warning or guidance to the progress of the business, only these select few are KPIs.

Each business is unique and whilst there are many shared measures and metrics the selection of your KPIs is likely to be unique to your organisation and based upon past experience. Many managers make the common mistake of building dashboards with far too many metrics on them and as a result creating cluttered and information overloaded views that look more like the bridge of the Star ship Enterprise than the clear and obvious indicators we are looking for.

At this point it's also worth mentioning the difference between KPIs and BI (Business Intelligence) as they are often confused. A KPI is a fixed measure that you periodically (say monthly) monitor over time and that often reflects the health or growth a business. Because you monitor this value monthly you can start to notice trends which may well be an early warning sign or something good or something bad. A simple KPI would be "Total Sales Value", where we would plot the total value of sales every single month to see if our sales were rising or falling.

On the other hand BI is about interrogating your data to learn new and interesting things. You can do this with a database, Microsoft Excel or a dedicated BI application. For example say one day you wanted to know, "Do we make more sales on Wednesdays in our Northern office?", now using your BI tools you can query and drill down into your data to uncover that answer, but you are not tracking this periodically, so it's not a KPI, it's just understanding your data .

There is an overlap from KPI systems to BI systems, for example, whilst you might track "Total Sales Values" month on month its very likely that if these figures look extraordinary a manager might want to drilldown into then to find out which products were the best or worst performers - so KPI software systems like Target Dashboard will allow you to do this.

2. Know the Sources of Data

The quality of your online dashboards is only as good as the data going into them. Ideally all our corporate data is stored in the perfectly centralised corporate database, but we all know that this is never the case. It's likely data will be in all of these sources:

  • Databases
  • CRM systems
  • Online apps
  • Excel files on the network
  • Excel file on a user's PC
  • In people's heads!

A KPI dashboard is the opportunity to unify this data into one single location so it can be compared and contrasted in the perfect context. It is therefore important that you are realistic and make sure that the dashboard system you put in place can handle the variation in data sources from manual to 100% automated. For example let's takes those "sales" again. The actual sales figures for last month might be pulled from our order processing database, but the "sales targets" exist on a spreadsheet on our Sales Manager's PC that he updates every month. Your dashboard must manage and merge these sources of data so when a user views the dashboard they are unaware of the underlying data's patchwork origin.

3. Know Who your Dashboards are for and how will they use them

Ok, so you have defined your KPIs, found the sources of the data, but before you start building some charts there is one more thing you need to consider.

Each KPI will be visualised in one or more ways, most likely as a chart or graph, however you must consider the underlying message that each visualisation is to communicate.

You can break this down into 4 types of KPIs

Quantitative KPIs

These are KPIs with a very specific number and where knowing this number is critical. For example, "Number of sales" [per month].

A bar chart is normally the perfect presentation of this type of data.

Directional KPIs

With some KPIs, the number is much less important than the direction of travel. An example of this would be "Number of days lost to staff sickness" [in a month]. Here the exact number of days is not that useful as we can't control this, however if the trend is rising we can take action accordingly.

In this case you need to make sure that your chart and dashboard clearly display the trend at a first glance, ideally a line or area chart.

Actionable KPIs

Often these have a target/ budget / objective associated with them with actions planned if we fall above or below this budget figure. For example, if we have a "department costs" and we also have a budget figure every month then should we exceed this figure then it's likely to raise some actions or discussion.

In this case a clear visual indicator ideally with some colour formatting gives the clearest message.

Distribution / Category KPIs

You may have KPIs that split the data into various categories, and you want to see the distribution of these categories. For example let's say we sell three products we might want to clearly see the split of sales last month across these.

A classic pie chart is good for this, but a bar chart is clearer see my previous post Why A Bar Chart is Better Than a Pie Chart

4. Layout Dashboards to fit Your Management Structure

As previously mentioned the most common mistake I see is web dashboards with 100's of metrics on them. This is hard to make sense of because there is just too much detail. The dashboard layout should be built in such a way as to reflect your management structure. For example, you might start with the highest level dashboard "Management Overview" which contains maybe 8-10 charts across all parts of the business that give a general overview. You can then build specific dashboards for key areas of the business for example "marketing". Whilst "website visits" might be an important KPI in the marketing team, it unlikely to be part of the overview, so by effectively creating "drill down" dashboards you can present other important metrics that a user can choose to view but without forcing it at them.

Building successful management dashboards is about being realistic with the data you have, your ability to collect it easily and your budget. You are much better to start small and build up than embark on a project to get every possible KPI on a dashboard, only to find that your ability to manage the data in some areas is not good enough and your colleagues lose confidence in the whole dashboard solution as a result. Follow these steps above and I can guarantee that your dashboard implementation will be more successful. Our in-depth guide will also give you more advanced tips on creating a great management dashboard.

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