Dashboards & Scorecards: Which Framework Should You Implement?

If you’re working on your strategic management plan, you have probably heard of scorecards and dashboards.

A scorecard is a strategic framework that helps align your organizational strategy with your company objectives. A dashboard is a business intelligence (BI) structure that gives you a visualization of a large set of data.

Both are excellent tools to have in your strategic toolkit, and they have quite a few similarities. They both need a process of data acquisition, data storage, and data management. They both need a process for generating insights, so you can make changes going forward. But, they also have quite a few differences, which we’ve outlined below.

Let’s take a closer look at the similarities and differences between these two business intelligence solutions and how you should consider putting each of them to work.

Dashboards

Positives:

• Important for capturing how your organization is performing at a given time or around a specific issue.
• Gives you the ability to visualize results and trends that your organization is excelling at.
• Great for known processes, when you don’t need to make any changes. You can afford to invest in a dashboard if you have a known, repeatable process, because you won’t need to change it anytime soon.
• Very visually appealing if it’s done well. You can use a BI tool like Qlik Sense or Tableau for better visualization.

Drawbacks:

• Not modified easily. If you want to track a particular project—like advertising vs. sales by car type at a car dealership—you would need to be very specific with your modifications of data acquisition, storage, and management. If you wanted to track social advertising (as opposed to advertising in general) vs. print advertising, or if you wanted to change the measures to compare your results vs. the competition’s results, you’d need to do a full modification of your dashboard.
• Typically can handle only one use case (for example, the steps toward achieving a particular goal).
• Not ideal for non-repeatable processes, because you’ll have to change the dashboard too quickly to make it worthwhile. These changes are a big hassle and can be very expensive. Keep in mind, however, that SAP, Business Objects, and other BI companies have a business model built around servicing dashboards, and they may be able to make this transition easier.

Scorecards

Positives:

• Content revision is much easier in scorecard software than it is with a dashboard.
• Better for the life cycle of a particular strategy that you have. In fact, it’s better for strategy in general, because it helps you center your strategy on your organizational objectives.
• Offers multiple points of control, which makes scorecards more flexible. For instance, you’re not just looking at numbers like you are in the dashboard. You are examining four perspectives: financial, customer, process, and growth.
• Good for imperfect programs or processes, and allows more flexibility for change over time.

Drawbacks:

• Doesn’t allow for ad hoc analysis. In other words, it doesn’t allow for the same business intelligence process in which you summarize your data and answer specific organizational questions, like “How much money did I spend on advertising?”
• Can’t show real-time information through the Balanced Scorecard like you can with good dashboarding software.
• Typically shows only aggregated information. So, if you want to drill into the details of the numbers, a scorecard isn’t going to be the best tool to use.

Dashboards & scorecards: Which should you use?

Unfortunately, there isn’t a simple formula that will help you understand which of these you should use. That being said, there are some guidelines you can follow to be sure you’re selecting the right method. Let’s look at a few examples:

Our first example deals with the number of KPIs your organization has. Actually, this isn’t the best determinant of which method you should use, but it will help you gain better insight into the strengths and weaknesses of dashboards and scorecards.

• If you have 10 measures and a simple use case, a dashboard may be perfect.
• If you have 100-1000 KPIs, decide which framework to implement based on this criteria.
• If your process is repeatable, the use case is straightforward, and you can segment the KPIs by role or user, you may be able to use a dashboard. If not, a single dashboard may be anything from complex to downright unmanageable.
• If you don’t fit the criteria above, the scorecard is your best option by far. It works well with a great deal of KPIs because you can prioritize, and you can create parent/child relationships to show the different levels.

The next example deals with control.

• If your responsibility is siloed—say you’re responsible for sales of widgets in Wichita—then a dashboard is perfect for you. You can gain deep insight on a relatively small amount of information; for example, you could drill down into sales by demographics, time of day, store, and more.
• If your responsibility is wider, or on a larger scale—say you sell widgets worldwide—a scorecard is going to be your best option. A scorecard will help you see the big picture of what’s driving and hurting the performance of your company. If you are tasked with selling all over the world, and you have to worry about suppliers, customers, employees and more, you’re going to want scorecard understanding in order to see clear indications of what’s going on now and what may happen in the future. The responsible owner needs to track campaigns or supplier improvement actions while evaluating KPI trends, as well as collaborate improvements with internal and third party team members.

Don’t Choose A $250,000 Solution For A $25,000 Problem

Dashboards and scorecards are both excellent business strategy tools. But if you implement the wrong one, you may be doing yourself a huge disservice. If you are a smaller organization and are enamored by ad hoc analysis, it may be tempting to look at a dashboard without even thinking through that decision. You could end up implementing a $250,000 solution for a $25,000 problem. Spend some time reviewing both of these frameworks so that you select the best tool for your organization.

A big thanks to Stephen Stone, the Vice President of Financial Management at Method 360, for offering his valuable insights for this article.