CFO Dashboards: Strategic Information at Your Fingertips

Rumy Sen
President, Entigence Corporation, McLean VA, USA

Tarun Sen Ph.D.

Professor of Management Information Systems, Virginia Tech, VA, USA
Director, Institute for Global Business Studies, VA, USA

Introduction

Through the development of management information systems from the 1960s to the present
day, making appropriate information available to strategic decision makers has been an elusive
challenge. In the early years, technology was the bottleneck; today too much information that is
globally dispersed can become the deal breaker. Providing the right information to the manager’s
desktop is a critical driver that leads to competitive advantage.

The financial health of an organization is without doubt a vital component of organizational

performance. With the onset of globalization, it is typical for organizations to have operations
spread in multiple countries, with several thousand employees, and numerous work centers that
operate under diverse tax and legal environments. For such organizations, integrating financial
information from a large number of physical and electronic sources in real time is extremely
challenging. Rapid advancement of enterprise computing and telecommunication technologies
should have alleviated the integration problem, but it has not. The problem underlying
integration is not due to the lack of technology; it lies in the fact that today’s competitive market
demands constant ad hoc adjustment of business processes. When and where these needs
arise, is difficult to predict a priori, but rapid integration of data from dispersed systems is almost
always required to support these needs.

Integration of information for strategic decision makers like the CFO requires a planned and well-
designed process that is similar to the development of an engineering prototype built on
aggregated components. For strategic decision, an ad-hoc business process with a concurrent
deployment of technology that meets the immediate needs of the business is seldom strategic. In
terms of long-term fiscal monitoring, the CFO dashboard is an information “tool” that supports the

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most critical information needs of the CFO so that the organization can be steered towards
continued financial well-being. The functionality of the dashboard is similar to an automobile’s
dashboard where the driver continuously monitors the gauges to see that all systems are
functioning optimally. Similarly, the dashboard is a vital tool for the CFO to guide the organization
in a direction that is consistent with the organization’s overall business strategy.

Critical Elements of a Dashboard

A dashboard is useful when it provides a quick view of the fiscal “health” of the organization.
There are various components of fiscal health. Some of these are common to all organizations
such as cash flow analyses and cost-drivers, while some are typical to sales organizations such
as actual versus targets by geography. Others are relevant to cost centers such as budget
versus actual analysis, personnel cost analysis, revenue and operational cost trend analysis.
Table 1 shows some “classes” of financial information that can be included in a dashboard.

Table 1. Sample Information ”Classes” for a Dashboard

Financial Ratios
Liquidity
Asset Management
Debt Management
Profitability
Market Share
Trend Analysis
Sales
Cost Excluding Depreciation
Net Income
Earnings Before Interest and Taxes
Cost-center Analysis
Income Statement Components
Balance Sheet Components
Budget and Forecasting
Cash Flow Components
HR
Procurement

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A well-designed dashboard provides a unique way of judging where you are now versus where
you should be at this point of the fiscal year. A dashboard without area-specific targets does not
hold much value in the short and long-run. The aggregates on the dashboard need to be
connected to the underlying details. When you notice a trend that is outside the thresholds you
have set for the organization, your staff can click on a point on the trend line to explore the
underlying detail to identify the reasons for the anomaly.

A Dashboard Development Strategy

The strategy for developing a dashboard is based on three equally important prongs: metrics,
constraints, and layout. Identifying critical success (or failure) factors to monitor is crucial for the
dashboard. The process to develop a dashboard must be managed closely by the CFO. It is up
to the CFO to determine what financial information is important. Further, the CFO should also
determine the constraints and the layout of the metrics as defined below. Technology should
take over only after these dimensions are clearly identified by the CFO.

Metrics

As a CFO, you are the driver of the metrics that are to be displayed on a dashboard. The
relevancy of these metrics, the frequency with which the data is refreshed and the
accuracy of the refresh directly impacts the efficacy of the dashboard and your ability to
make swift and accurate decisions. Start with an inventory of metrics – between three
and five – for each area of oversight such as operations/administration, sales, capital
projects, fulfillment/supply chain, etc.

During the process to compile the list of metrics, it is critical to abstract to the business
process level and not be mired in the intricacies of the underlying applications from which
the data for the metrics will be derived. Prioritize each area of management and the
metrics within the area. For each metric, design a way to validate the numbers that will
display on the dashboard. This will significantly speed up the dashboard development
process and help alleviate the data inaccuracy issues that pose huge challenges in
dashboard implementations.

Constraints

Once the metrics inventory is completed, specify the fiscal constraints for each metric in
business terms. Be as specific as necessary to provide context to the metrics. “Sales

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 target by region and quarter” is more useful than “sales target”. This tightening of the
context will help you to refine your metrics and at the same time provide the necessary
application-context to your IT staff during construction of the dashboard.

It is important to recognize the metrics provided in Table 1 are generic in nature. The
dashboard should be specific to the organization and what may be important to monitor
for one organization may not be the same for another organization. When the dashboard
components are constrained to your needs, they become meaningful to the organization.
Generic, off-the-shelf dashboards are unlikely to be effective for this reason.

Layout

Your participation in the planning of the real estate of the dashboard – the look and feel –
is the third prong of the strategy. You will use the dashboard only if it is intuitive, relevant
and accurate. By participating in laying out where and how the metrics will display, you
control the effectiveness of the dashboard. This is an often-ignored part of the strategy
and invariably compromises the end-result. Encourage your IT team to use a rapid-
prototyping approach (with mocked-up data) to help you iteratively design the dashboard.
Weigh the advantages and disadvantages of putting everything on one web page versus
a multi-tabbed page with the most important metrics on the first tab and the most
infrequently viewed metrics on the last tab. Remember, this is your dashboard so take
control of how and what to display.

Case Study

A large organization in the United States followed the above strategy to deliver to its executive
stakeholders and legislative oversight committee a highly successful dashboard. This
organization has total operating base of over USD 10 billion. The CFO’s office is organized into a
budget and planning division, an operations division and over 75 departments. Over the last ten
years, the CFOs office undertook two initiatives to implement commercially available off-the-shelf
enterprise-level budget and planning applications. After spending over 10 million USD, the
budget and planning division, which is driven my multiple executive mandates, was unable to
deliver a dashboard platform despite stakeholder expectations.

Later, the CFOs office under growing pressure from key stakeholders rolled out an executive
dashboard containing the following components:
Trend analysis

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 Year-on-year analysis for specific areas of revenue and cost factors
Personnel costs by FTEs and ratios
Supply Chain/Procurement thresholds, vendor performance
Capital improvements.

Figures 1 to 3 show snapshots of the dashboard. These dynamic views allow the user to select
fiscal year, accounting period, various components of the accounting chart fields (funds,
accounts, departments, etc.). The dashboard puts the information at the fingertips of the users
with the efficiency expected from a point-and-click platform. When the mouse is hovered on top
of a pie segment, the dashboard displays the aggregate represented by that segment. A
combination of gauges and pies are used to represent the year-on-year information in an intuitive
manner.

Figure 1: Budget vs. Actual View

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Trend analysis graphs included the original budget trend as well as the inflation adjusted budget.

Figure 2: Trend Analysis View

Procurement data displays in a separate tab of the dashboard. By clicking on a specific purchase
order or requisition, the user is able to drill down to the vendor information. Further by clicking on
the “History” button, you can view the complete history for a specific order.

Figure 3. Procurement Information in the Dashboard

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The data for the metrics in the CFO dashboard is derived from multiple enterprise systems, some
of which use different ways of encoding the same data. The information repository underlying the
dashboard brings this heterogeneous and often disconnected data into a completely integrated
and accurate view to meet the specific needs of the CFOs office.

Challenges in Developing a Dashboard

There are a myriad challenges in developing a dashboard. All the reasons boil down to two risk
factors – a) an incomplete and/or irrelevant list of metrics and b) inaccurate data. Out-of-box
dashboards have not met with success because there is no one-size-fits-all when it comes to
fiscal metrics. By following a thoughtful metrics-based strategy you can significantly reduce the
risk of the first of these risk factors. Inaccurate data often stems from the inadequate integration
of data from multiple enterprise applications. IT often finds itself in a bind while integrating the
right data in the right ways - business rules are unclear, integration points are not clearly
documented, and processes lack consistency, among other related issues.

The best way to minimize the risks associated with integration is to develop a dashboard
information “repository” that is separate but derived from the enterprise systems. This repository
is often called a data warehouse or a data mart. Based on the scope of the metrics that you and
your staff will define during the dashboard strategy phase, the IT team will be well positioned to
pull the relevant data from multiple systems, cleanse the data, conform the granularities (daily
versus monthly versus yearly for instance) and produce aggregates that are meaningful,
accurate, and refreshed on a timely basis. This strong integration foundation is a critical success
factor for dashboards.

Conclusion

Gone are the days when as a CFO you could wait a few days to get the reports or numbers that
your office was on the hook to deliver to internal and external stakeholders - the information that
you need to manage your business in a timely manner. Your organizations are moving faster
than ever before while the time you have to process the data into useful nuggets of information is
shrinking. In effect, we are processing more information yet our cognitive capacity is unaltered.

In this fast-moving, constantly changing strategic and operational environment, the way you
analyze data requires a paradigm shift. There is more data to analyze, more systems to source
the data from, and more spreadsheets to integrate. A well-designed dashboard can alleviate your

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analytical pressures significantly. The critical success factors are your active participation and for
IT to think out-of-the-box and deliver to you integrated data without upsetting the enterprise
systems already in place. THE CFO dashboard is not a reporting system, but a vital visual
monitoring system for the entire business.

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