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Establishing healthy growth and implementing the best scaling strategies in your company can’t be done without properly tracking and analyzing business data.
After all, the vast majority of decisions you make should be based on your company’s specific KPIs and metrics.
To squeeze valuable insights from the raw business data and understand the key performance indicators, companies use business intelligence tools, with the two main options being dashboards and scorecards.
But what exactly are dashboards and scorecards, and how can we tell them apart?
In this article, we will get into both of them in detail, talk about their benefits, and explain the differences between the two.
Dashboards are one of the most frequently used business analysis tools in modern companies. They are used for visualizing large sets of data through graphs, charts, maps, and other visual features, all in one place.
You can incorporate dashboards to monitor various operational activities within the company and track the most important key performance indicators in a project or process.
Furthermore, dashboards provide an instant overview of key metrics that the highest-ranking members of the company need to make everyday decisions, and are constantly updated when real-time changes occur.
They can also help you better comprehend certain aspects of the business and understand how the company is performing on a certain issue.
The best dashboards are informative, simple, concise, quickly accessible, and include tons of valuable insights.
Depending on the purpose behind it, there are four types of data dashboards you can create:
A scorecard is a performance management reporting tool that is used for comparing the current activities in your company with the planned objectives and results.
In essence, companies use scorecards to align their strategies with the objectives by tracking important metrics related to customer information, projected growth, financial data, and business activities.
Scorecards are also the perfect solution in case you need to fine-tune the points of control, sharpen the organization’s processes, or optimize any current strategies.
This tool focuses more on providing a static overview of the organization at a specific moment, which means it isn’t really suitable for automatic analyses, real-time updates, or showcasing more granular details.
To better understand just how beneficial scorecards can be, here is a brief list of some of the main reasons why companies incorporate them:
In summary, scorecards track KPIs and analyze both the current metric status and the overall target value. Once you understand the gap between the two, you will have an easier time managing performance and coming up with better strategies to reach your company goals.
For best results, scorecards should be updated each week or month, depending on the amount of data you are dealing with.
Now that you know what scorecards are, it’s time we take a look at their benefits on a more granular level.
There are two main types of scorecards and we will go over both to help you understand their differences and decide which one to utilize.
But, before we get started, we recommend that you also check out our survey where we talked to dozens of experts about the use of scorecards. Seeing real-life examples of how scorecards are used will help you streamline your own company more efficiently.
Without further ado, let’s dive into the benefits.
Traditional scorecards are used for acquiring a birds-eye overview of the performance of each department, team, and individual within the company.
This type of scorecard is extremely comprehensible, but it’s dependent on the set objective.
Some of the main benefits of traditional scorecards are:
Balanced scorecards provide you with insightful snapshots of your company’s activities, finances, and overall operations.
A great balanced scorecard displays data of both external services and internal functions. They represent a variety of different insights from one central location.
Some of the most notable characteristics of balanced scorecards are that they include the most valuable KPIs, have precise goals, and display target values numerically to make the comparison process easier.
The main benefits of balanced scorecards are:
To put it simply, balanced scorecards help you with strategic planning, improve communication, and allow management to make data-driven decisions.
You can use these scorecards to squeeze value from the raw data and create valuable insights that will streamline your business operations.
As you can see, scorecards can bring tons of value to your company. However, creating them isn’t exactly the easiest task.
Since scorecards provide a static view of your KPIs, you will have to log into multiple tools and build a new scorecard probably each week.
To streamline this process, you can use Databox Scorecards.
With Databox Scorecards, you will receive all the latest updates regarding your KPIs and metrics via email, mobile notifications, or Slack as soon as they occur. This saves both your time and nerves.
Sometimes, you will hear people refer to scorecards and dashboards as essentially the same thing.
But, this doesn’t actually make much sense when you think about it.
Even though these two business tools share a lot of similarities, there are some striking differences between them that can’t be overlooked.
Here’s a table I created to help you glance over the differences quickly.
Let’s check out these differences in detail.
A dashboard is a business tool that provides a visual overview of the most important KPIs and metrics in a company and updates them in real-time.
A scorecard is a framework that analyzes the current strategies and compares them with the company’s overall objectives.
To put it simply, purpose of a digital dashboard apps is to track performance, while a scorecard is focused on managing it.
Dashboards typically come with intelligent alarm systems that track data in real-time, while scorecards do that only occasionally (on a daily, weekly, or monthly manner).
For instance, if you were in a meeting, presenting the latest findings to your team, the dashboard will automatically inform you of any anomalies that occurred in real-time.
Scorecards will show you the exact same updates, but a week or a month later.
In dashboards, the main measurement tool is the included metrics.
On the other hand, scorecards combine both metrics and target values as the main measurement tool.
Scorecards focus on long-term goals, while dashboards are revolved around short-term goals.
While a business dashboard offers users a clear overview of company performances, scorecards display the most important business activity trends in a certain time frame.
Dashboards are most frequently used by low and middle-level management to make everyday decisions, while scorecards are typically used by top management during strategic planning.
Dashboards are one of the best ways to obtain an operational view of success and most important business activities, while scorecards are centered on company policies.
The data you find in dashboards is mostly used for describing team performance, expenses, and resources, and managing it.
On the other hand, scorecards compare the performance to the company’s target values.
Even though there are dashboards that can be used in a combination with scorecards, the best practice is to include both tools.
Okay, so we have gone over what scorecards and dashboards are and talked about the main differences between them.
Now, it’s time we take a look at exactly how you can create a KPI scorecard dashboard.
Follow these steps to build a great KPI scorecard dashboard.
Since KPI scorecards primarily focus on comparing performances to target objectives, we first need to set up the goals that will be taken into consideration.
You can either choose short-term or long-term goals and don’t forget to define whether you want to look into specific business areas or acquire a general overview.
The most important thing here is to make sure that your objectives are realistic.
Once you have a goal in place, you have to come up with the right strategies to achieve it.
This is where a strategy roadmap can come in handy – you can use it to make a list of everything you need to implement to reach the desired objectives.
When building a strategy roadmap, remember to always consider your employee’s capabilities and budget.
Perhaps the most important step to building a great KPI dashboard scorecard is choosing the KPIs and metrics you will use for measuring performance.
Since each business area is full of different KPIs, you have to carefully choose the ones that will be the most valuable when measuring your objectives.
The main things to look out for are that the metrics provide context, are measurable, and that they can develop over time.
Below, you can see an example of what choosing metrics for a marketing scorecard looks like in Databox. The process is very simple, you just have to choose a specific data source and pick out the metrics you are most interested in.
While defining the goal, strategy, and KPIs your dashboard scorecard will revolve around is extremely important, you shouldn’t overlook the other aspects.
Some of the options you should also pay attention to are:
Customizing these options manually can take up a lot of time, which is why with software like Databox, you can do it all in one place.
Lastly, you should always talk to the people in the departments that are relevant to the creation process.
To better understand the data you are working with and visually display it, it’s always recommended to collaborate with the departments that are most knowledgeable about it.
Creating a KPI scorecard from scratch is one of those things that don’t get much easier with time.
You will always have to spend a hefty amount of time pulling data from the various tools, filtering out the most important information, and then building the scorecard in Excel or Google Sheets.
Luckily, advanced tools like Databox can help you automate this process.
The process is as simple as choosing your data sources, selecting the relevant metrics, picking a delivery time, and adding the recipients.
Databox allows you to sync all of your important tools and automatically populates your scorecard on a weekly basis.
Want to impress your shareholders with an outstanding KPI scorecard? Sign up for a free trial and create your scorecard today!
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