Sometimes it is easier to answer the question on how to balance our government’s budget compared to identifying a threshold. Thresholds are a critical component of business dashboards and no business should attempt to do without. I am writing this from the perspective that a company would like to: grow, increase profits, decrease expenses, and be more productive.
In terms of charts and dashboards:
– What is a threshold?
A threshold identifies a specific minimum or maximum value in which to achieve or avoid. Thresholds are useful when combined with a course of action. If a call center needs to answer calls within 3 rings, then we’ve identified a threshold, “3”; that was easy. But now let’s consider a KPI illustrating accounts past due.
– How/where are they used (in the color ranges)?
Within a chart, thresholds can be identified with visual colors, limit-lines, or icons. Some charts only display the threshold, like a traffic light. Other charts illustrate complete KPIs with a visual accent on thresholds.
– What do they represent?
When a chart or dashboard illustrates the crossover past a threshold, it should represent an action item. For example, if an expense crosses the threshold (budget), then the business needs to take action. Maybe that translates into a decision to stop spending or a decision to request additional funding.
– What is the threshold for my KPI?
Don’t just throw darts in the dark hoping to identify a critical business measure. If somebody is using a dashboard for Business Intelligence, then they probably have a threshold in mind for each of the visual charts. It may be necessary to ask end-users of a dashboard “What number Do/Don’t you want to see?” And be realistic too. Obviously any Accounts Receivable Past Due is bad, but between a $1,000 account and a $125,000 account, one will raise the hairs on the neck of an account manager.
Ken Rose – Technical Consultant, iDashboards