Introduction

Dashboards have become an essential business tool, allowing managers of different functions to review metrics and act quickly. With better tools and data availability, it is now easier for anyone to build dashboards.

Stephen Few, a thought leader in information design, included a few criteria for dashboards in his book "Information Dashboard Design: The Effective Visual Communication of Data," namely:

1. It should be a visual display of information,
2. In it, one or more objectives are consolidated on a single screen,
3. It can be monitored at a glance.

So, how should we manage dashboards, especially within the FP&A function? What are some of the frameworks and processes to ensure the effectiveness of FP&A dashboards? 

This article will explore some of the frameworks developed for dashboards in general and how FP&A professionals can design informative and insightful dashboards for their target audiences.

What Are FP&A Dashboards?

FP&A dashboards have evolved from simple Excel tables and graphs to dedicated visualisation software. They are no longer limited to financial numbers and include Key Performance Indicators (KPIs) for different activities, such as pipeline, marketing campaigns, supply chain performances, etc. This change from purely financial numbers to encompassing KPIs highlights the expansion in the scope of the FP&A function.

In recent years, FP&A teams have been engaging in Integrated FP&A, and this shift means that FP&A dashboards need to cover more than just financial indicators. FP&A analysts can create dashboards in spreadsheets and share them via collaboration tools within a company. They can also use dedicated tools to create dashboards accessible via the cloud.

With this in mind, how can FP&A professionals create helpful and informative dashboards to support their Business Partners?

Theoretical Frameworks for Developing FP&A Dashboards

There are a few theoretical frameworks that can be a guide to effective FP&A dashboards. One approach is to start with a company's vision and mission statement, allowing the company's objectives to be aligned at every level and with different functions. It will also help define the key success factors, which can be translated into KPIs, such as using Objective Key Results (OKRs), followed by target setting and performance evaluation. FP&A can then develop dashboards to track the relevant KPIs or OKRs for the group they support, but at the same time, help the team relate performances to broader organisational goals.

Defining the Dashboard Objectives

The next step is to define the dashboard objectives. Here are examples of considerations when designing the dashboard:

• Are you creating the dashboard for short-term operational targets (e.g., focusing on the current month/quarter), or do you want the dashboard to provide insights for the whole budget cycle? For example, a dashboard can also track sales versus forecasts, sales quota achievements, etc.
• Are you creating the dashboard for operational teams or operational KPIs, or are you looking at enterprise metrics for the C-suite and Board of Directors? Regional management teams may require in-depth views of different markets, while the C-suite and the Board of Directors might be more interested in a dashboard showing daily revenue trends.

When designing the dashboard, there can be two tiers of information:

1. First-tier data should include KPIs that are critical to the business. For example, revenue trends, margins, pipeline, etc. These are KPIs that are not likely to change.
2. Second-tier data may be KPIs that can change as the business changes its focus. Dashboards can include data for various business drivers, such as pricing, marketing investments, forecast accuracy, etc. They should be flexible enough to accommodate short-term initiatives.

Collaborating with Other Functions to Design the Dashboard

FP&A professionals should work across all functions during the dashboard design phase to support different business functions in tracking their KPIs. For example, in FMCG industries, the forecasting of production and inventory levels are heavily reliant on sales forecast by product segment. On the one hand, product sales forecasting will roll up and become the sales forecast. At the same time, the same product sales will flow to the supply chain for use in production planning and inventory management. FP&A professionals need to understand how the dashboard can provide each function with the data to align with their specific activities.

Key Focus When Implementing Dashboards

Once the team finalises the design, the implementation of the dashboard will require the following:

1. Ensure data integrity and have one source of data

One common mistake is that different teams may use other data sources for the KPIs. For example, FP&A may use data from the accounting system to report marketing spend, while the marketing team may use their system that aggregates campaign spending as their marketing spend. When different teams use different data sources to report on the same KPI, the differences can undermine people's confidence in the dashboard. Having aligned definitions of KPIs and a single data source will ensure that functions are consistent in their reports.

2. Provide insights

Dashboards provide quantitative data. The FP&A team can provide comments and identify actions required to correct the course. FP&A professionals can help link data points, advise management to take action or help different functions coordinate their efforts to achieve goals.

3. Fully utilise the dashboard

Dashboards are often created and shared but not used in discussions. For example, the FP&A team should drive conversations or discussions using the dashboard during forecast reviews.

Recent Trends Impacting the Future of Dashboards

Here are a few trends that I am seeing in terms of how FP&A dashboards evolve:

One trend is an increased involvement of FP&A teams in Integrated FP&A. As integrated planning becomes more common, more functions will build dashboards to provide the next level of data. FP&A professionals must understand how this data is issued and keep track of data integrity to avoid disparities. It can be accomplished by working with different functions and incorporating these data through "drill-downs" of KPIs presented in the higher-level dashboards.

The second trend is the use of Artificial Intelligence (AI) to create dashboards. With the recent development and the explosion of interest in ChatGPT, creating dashboards using AI will become mainstream due to the ease of use and speed at which dashboards can be made. AI can help prepare dashboards or provide basic descriptive analysis, such as describing variance against forecast or budget and calculating year-over-year growth. These can help save time and eliminate errors in calculations. FP&A professionals can provide more insights by wrapping the narrative into context and, for example, explaining how natural disasters impacted a particular market or anticipating how an external event such as a strike may affect upcoming sales performance.

One final trend is the increased availability of self-service dashboards. With tools like Power BI and Tableau, more functions are building dashboards. FP&A can work with IT and other teams to ensure that data sources are sandboxed. This will reduce the risks of data disparities in the creation of dashboards. FP&A should standardise the definition of KPIs and terms to minimise miscommunication.

Conclusions and Recommendations

As data management and visualisation tools mature, dashboards can provide the information an organisation needs to diagnose and address issues proactively. While businesses move to integrated planning, self-service dashboards are becoming commonplace. FP&A teams can play an important role by taking the lead in defining, building, maintaining, and utilising dashboards.

This article was first published on the think-cell blog.