Dimitrios V.

Siskos

What is the optimal number of KPIs per

professional?
Operational and tactical dashboards: differences and
similarities

To: Dr. Thomas Grisham

March 21, 2014

This paper is submitted in partial fulfillment of the requirements for Controlling and Performance
Management (Doctorate of Finance)

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Contents

Contents.................

Abstract..............

How many KPIs in a management measurement system should any professional be

responsible for? Does the traditional span of control policies and practices apply here?.. 4

How are operational and tactical dashboards different and how are they similar? .... 5

References....................... 8

March 21, 2014

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SMC Working Papers

What is the optimal number of KPIs per professional?

Operational and tactical dashboards: differences and similarities
Siskos V. Dimitrios
Swiss Management Center (SMC) University
March 21, 2014
Abstract
Once a firm has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a
way to measure progress toward those goals. As such, Key Performance Indicators (KPIs) enable
professionals to measure performance against those targets objectively. However, there are many different
KPIs, which they differ depending on the organization. The challenge is to find the right level KPIs for
effective measurement and management. Initially, this article provides useful notes about the number of KPIs
that any professional should be responsible for. Alongside the business efforts to measure performance and
examine whether their strategies have been achieved, operational and tactical dashboards have become a
critical addition to planning and decision-making toolbox. Thus, this paper also provides the differences
between the use of operational and tactical performance dashboards, as well as the common ground between
those two.

Keywords: Performance Measurement System, Key Performance Indicators, Dashboards, Operational and
Tactical Dashboards

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Dimitrios V. Siskos

SMC Working Papers

How many KPIs in a management measurement system should any professional be responsible for?
Does the traditional span of control policies and practices apply here?

Today, more and more professionals express interest in using Key Performance Indicators (KPIs) to
measure performance against their business objectives, their daily operational goals, and additionally, to
support their longer term strategic endeavors. Higdon (2012) describes KPIs as the performance metrics
which provide objective determination of success in terms of progress towards strategic goals. The
importance of KPIs to business functions was anticipated even before the financial crisis. For example, Lind
et al. (2007) identified that the choice of a KPI and the manner in which it is implemented determines the
success of the treasury function.
In order to build business for the long term and to improve performance, the decision making process
should be based upon discrete KPIs relative to industry benchmarks, which would appear to deliver a more
accurate measure of market value (Nugent, 2003). Within this backdrop, although the application of systems
to achieve these objectives are difficult and expensive to implement (Johnston et al., 2002), it becomes
fundamental to design and refine KPIs that are critical to the firm. However, as Eckerson (2006) highlights, it
is rather complicated to do this as long as effective metrics is often more of an art than a science. To avoid
falling prey to analysis paralysis1, managers should not try to design the perfect metric, but rather apply it in
practice once it is about 80 percent complete.
The basic question or issues surrounding the use of KPI measures is to determine the right amount
needed for effective performance management. However, in real world, it is rather complicated to determine
an ideal fixed number, due to the attaching human attributes in handling and managing the array of KPIs
(Sammut, 2012). Miller (1956) suggested the emblematic seven, plus or minus two, while Champagne
(2011) considered the magic number of KPIs to be about 20-30. Generally, there is no hard and fast rule,
1

Analysis paralysis is the condition where people become so caught up in planning that they can't bring themselves to actually act
on their plans.

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SMC Working Papers

and probably no right answer. Actually, the right balance can be achieved when the organization is able to
define the desired end points, to maintain a balanced set of management perspectives and to design effective
KPIs that support them. KPIs should be enough to reflect business focus and priority, but they have to be
eliminated when they are at the point at which they create breakdowns and confusion.
The decision-making culture of organizations has been spectacularly altered during the last decade. The
traditional span of control policies has given its position to numerous tools for decision analysis that run on
ordinary PCs, laptops and tablets. These make it easier for human decision makers to structure a decision
problem, and help visualize the effects of possible outcomes. However, not only humans are decision makers.
Research made by Younes (1998) has proved that such computerized tools for decision analysis can be used
effectively by intelligent agents2. For example, organizations like NASA are seriously investigating the
possibility of making space probes more autonomous giving them richer decision making capabilities and
responsibilities, instead of maintaining a ground crew who would be in charge to continually tracking theirs
progress (Wooldridge, 2002).
As such, firms are obliged to reshape theirs structure in order to fit continuously innovative information
technology, following the radical change in fundamental business procedures (Gurbaxani & Whang, 1991).
In fact, a contemporary business acts more effectively when it relies on a defined, homogeneous and
regulated structure rather when it depends on leaderships and personalities (DuMoulin, 2007).

How are operational and tactical dashboards different and how are they similar?
The after-crisis business environment requires from organizations to disengage from the perception to
rely on the experience of the personality of a strong leader, and to adopt the use of performance dashboards
that convert the companys strategy into objectives, metrics, initiatives, and tasks (Eckerson, 2012). While

An intelligent agent is a software agent that exhibits some form of artificial intelligence that assists the user and will act on their
behalf, in performing non-repetitive computer-related tasks.

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professional and companies seek to better understand their customers and manage a diverse line of services
and products, the managers should have the ability to differentiate between performance dashboards
(Eckerson, 2006), choosing the right one each time. For instance, a commercial oriented dashboard will differ
from a production oriented one. The two main dashboard applications, operational and tactical ones, should
become a critical addition to planning and decision-making toolbox as the proper use of each can bring great
benefits into business.
Operational dashboards are used by professionals who need a quick update on the current status of their
operations, so as to make right time decisions in a given business area (Chitale, 2012). In addition,
operational dashboards emphasize in monitoring functions, as to enable front-line workers and supervisors to
track core operational processes. For example, store managers need to monitor inventory to avoid stock outs.
On the other hand, tactical dashboards emphasize analytical functionality, as to help managers and
analysts track and analyze departmental activities, processes, and projects (Eckerson, 2006). Moreover,
tactical dashboards are used as a tool for measuring the progress of a project or activity and have the target
audience who are mostly the midlevel management. For example, the International Truck and Engine
Corporation3, uses a tactical dashboard to give financial managers greater visibility into operations and help
close their financial books faster at the end of each month (Eckerson, 2006). An enlightening example
regarding both dashboards, could be in a manufacturing department where tactical dashboards could be used
for setting regular quality review meetings, while the operational dashboards could be used to compare actual
and target rate of returns as a monthly value.
Although the differentiated nature of dashboards, given that they focus on different organizational
players, the common ground of operational and tactical dashboards could provide a competitive edge which
can lead the firm positioning itself ahead of its peers in the marketplace. As Sammut (2012) refers, this may

International Truck and Engine is a leading producer of mid-range diesel engines, medium trucks, heavy trucks, severe service
vehicles, bus chassis and a provider of parts and service sold under the International brand.

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SMC Working Papers

be the key to drive the firm to unchartered territory of modern business by tapping and combining human and
technological resources to their combined optima.
Furthermore, many frameworks of both operational and tactical dashboards are quite similar. For
example, the users in both cases are managers, specialists and other professionals. Similar to tactical
dashboards, the narrow scope of operational dashboards dictates more detailed information with strong
analytical functionality to perform root-cause analysis on the displayed data (Rasmussen, Bansal & Chen ,
2009). Last, both dashboards give emphasis into monitoring business units and providing information about
business activities.
In more common parlance, interconnecting tactical and operational dashboards in lieu of separating
them, expedites the firm towards correct decision-making by analyzing information both horizontally as well
as vertically (Bishop & Arora, 2008). The recent financial crisis in conjunction with the market complexity
has shown that a modern manager should lie jointly at the tactical and operational levels in order to monitor,
manage and analyze every aspect of the firm. Such a combined absorption within the overall corporate
strategy framework would protect firm from hazardous situations and would precipitate the firm towards
correct decision-making.

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References
Bishop, T., Arora, A., (2008). Executive Dashboards: Putting a Face on Business Service Management, Best
Practices White Paper, BMC Software, available at:
http://documents.bmc.com/products/documents/72/99/67299/67299.pdf
Champagne, B, (2011), Too Many KPIs? Tips for Metrics Hoarders, Performance Perspectives, available
at: http://epmedge.com/2011/02/24/too-many-kpistips- for-metrics-hoarders/
Chitale, A.( 2012). Dashboards: Go beyond a Collection of Gauges SAS Global Forum2012.
DuMoulin, T, (2007), The Evolving IT Service Organisation: Organisational Design Considerations for IT
Service Management, Pink Elephant, available at:
http://blogs.pinkelephant.com/images/uploads/troy_dumoulin/The_Service_Organization_v3. 1.pdf
Eckerson, W. (2012). Secrets of Analytical Leaders: Insights from Information
Eckerson, W. W., (2006). Intelligent Enterprise. 9(2), 24-29, CMP Media LLC, Manhasset.
Gurbaxani, V & Whang, S, (1991). The Impact of Information Systems on Organisations and Markets,
Communications of the ACM, 34(1).
Higdon, P. (2012). Monitoring, benchmarking and improving treasury performance: The practical application
of key performance indicators (KPIs) in treasury. Joumal Of Corporate Treasury Management, 4(4),
293-310.
Johnston, R. Brignall, S., & Fitzgerald, L. (2002).Good enough performance measurement: A tradeoff
between activity and action. Journal of the Operational Research Society, (53), 256262.
Lind, M., Bergstrm, P. and Andersson, K. (2007). 'The Role of Key Performance Indicators for Trensury',
Journal of Corporate Treasury Management, 1(2), 125-132.
Miller, A. (1956). The Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for
Processing Information, Psychological Review

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Nugent, J. (2003). Plan to win: Analytical and operational tools Gaining competitive advantage (2nd ed.).
Boston: MA, McGraw Hill.
Rasmussen, N., Bansal, M., Chen, C. (2009). Business Dashboards: A Visual Catalog for Design and
Deployment. John Wiley & Sons, Inc., Hoboken, New Jersey.
Sammut, J. (2012). How Could Intelligent Bots Similar to Ca Unicenters Neugents Enhance Real Time
Business Performance Management and Reporting? How Many KPIS in a Management Measurement
System Should Any Professional Be Responsible For? Does the Traditional Span of Control Policies
and Practices Apply Here? Available at SSRN: http://ssrn.com/abstract=2129709 or
http://dx.doi.org/10.2139/ssrn.2129709
Wooldridge, J.M. (2002), Econometric Analysis of Cross Section and Panel Data .MIT Press: Cambridge,
MA.
Younes, H. L. (1998). Current tools for assisting intelligent agents in real-time decision making. Master's
thesis, Royal Institute of Technology and Stockholm University, Stockholm, Sweden. No. 98-x-073.

March 21, 2014

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Dimitrios V. Siskos