Business Metrics / Measurements

This page describes how measurements can help us make better decisions.

Topics:
Dimensions of Measurement
Formats of Presentation
Resources
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Sound: “Computer, status report” by Jean Luc Picard of Star Trek

Why Measure

"Like most poets, preacher, and metaphysicians, he burst into conclusions at a spark of evidence." —Henry Seidel Canby of Ralph Waldo Emerson (from Quoteland.com).

Why is the standard U.S. railroad width 4 feet, 8.5 inches?
The English expatriates who designed the U.S. railroad system based their measurements on tramways built in England before railroads, using the same tools used to build wagons, which were also that width. Wagons were built to that width so that they fit it the ruts on old English roads. Many English roads were built by Romans, whose war chariots had a width of ... 4 feet, 8.5 inches.

Dimensions of Measurement

We want to achieve balanced improvement in these indicators of our organization's progress.

Type of Measurement	Level of Management Supported	Measurements
Strategic	Executive	Profit, Customer Satisfaction, Cost-of-quality
Tactical	Middle Managers	actual vs. planned productivity by process
Operational	First-line supervisors	Production, Product quality

Examiners of the Malcolm Baldrige National Quality award evaluate an organization based on how to do it (implementation):

Dimension	Sub-dimension
Approach	People, Process, Product, Customer, Supplier
Deployment	Short term (3-12 months), Long term
Results	Producer Customer

Here are the dimensions of measurement:

1. Volume of Output (Thruput)
2. Satisfaction of Customers and Employees -- our ultimate aim
3. Quality of Products (Tolerance)
4. Yield from Equipment (Productivity)
5. Utilization of Labor (Efficiency)
6. Speed of Turnaround (Cycle Time)
7. “Bottom-line” financial Profitability
8. Creativity (Employee/Organizational Development, Health, Safety)

We make decisions based on assumptions and myths about the relationsip among these dimensions. For example, we assume that higher volume results in higher profitability.

Metrics for measuring computer performance

Get this print framed for your wall!

A Beginner's Guide to Demographics

The 100 Best Research Sources

• Wilsonweb's Demographics of Web Users - Web Marketing Today Info Center

• 1990 U.S.Census Data Lookup

• CACI Demographic Databases

• RAND California statistics [requires registration]

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  QAI's Implementation Dimension Cycle:

Great Dashboards

An example: the Akamai Net Usage Index for Retail applies several principles for effective dashboards:

1. Use a visual map

A familiar map of the world, U.S. states, street map, floor plan, etc. provides memorable anchors to make items easier to find.

2. Present data versus what is "normal" or average

The "7% Above Normal" in the lower right corner and "+21%" for "South America" flags exceptions which help values rise out of the clutter.

Normal values do not need to be shown because that can be calculated from the number and the percentage.

3. Provide a Legend of Abbreviations.

Example: "VM = Visitors per Minute".

4. Normalize values using a base population statistic.

Dividing a raw activity number such as VM by the population generating that activity generates a utilization statistic that marketers may consider useful because it focuses on the pool of potential customers. For example, activity in Asia (North Korea in particular) will seem small when expressed as a percentage of its population. "Per square mile" of land mass is another base statistic.

5. Highlight peak values and correlate them to events.

The Akamai Net Usage Index for News lists previous peaks and associated news event.

6. Allow users to specify the meaning of colors.

Different cultures assign different meanings to a particular color. Those who are color-blind may need different tones of black and white.

7. State conclusions based on facts.

Some say numbers are useful only if they lead to some conclusion that supports a recommendation for action.

8. Correlate Different Measurements.

Infommersion's sample Executive Banking Dashboard

Formats of Presentation

Different formats of charting are used to graphically present the status of measurements. Each format has a unique purpose. One chart format alone does not tell the entire story.

Bar Charts
Box and Whisker Charts (about data distribution)
Cumulative Line Charts
Trend Line Charts
Percentage Trend Charts
Seasonality Charts
Indexed Trend Charts
Geographic Maps

These major formats are described below.

BeGraphic.com adds on to Excel and Powerpoint creates these innovative charts:

• cascade chart / waterfall chart,
• Marimekko / Mekko chart,
• Bumpchart, Parallel
• coordinates,
• Cleveland dot plot,
• Tree map,
• PowerPivot charts,
• Pivot chart, Pivot diagram, dynamic diagram,
• Ishikawa / cause-effect diagram,
• SCADA system,
• control room,
• strategic maps,
• Balanced Scorecard stratgy map
• All-inclusive charts: commented charts, augmented graphics
• Data-driven matrix: SWOT analysis model, vector glyph, BCG matrix, ALD matrix, McKinsey matrix 7S, RB profiler
• Dynamic maps: Choropleth map, make a custom map in Excel, thematic map in PowerPoint, dynamic sales territory, mapping tool, geographical information system in Excel 2010, and any innovative charts
• Story-telling graphics: DuPont chart, business chart, business graphics, professional excel chart, Excel gauges, professional-looking dashboard visualizations, moving bubble, motion chart, trend analyzer...
• Tufte's in-cell charts: mini-graphs, micro-charts,
  sparklines for Excel

REMEMBER: time advances from left to right.

$65 Corporate Diagnosis: Setting the Global Standard for Excellence by Thomas L. Jackson and Constance E. Dyer. Productivity Press, 1996 is a classic because it provides a step-by-step method for diagnosing an organization's strategic health and measuring its overall competitiveness against world class standards. With checklists, charts, and detailed explanations, Corporate Diagnosis is a practical instruction manual. Detailed diagnostic questions in each area are provided as guidelines for developing your own self-assessment survey.

Seasonality Charts

If different lines on a trend chart is used to show results from the same subgroup over each of the same 12 month time frame each year, we call it a Seasonality Chart.

This chart helps us visualize peak and low levels in the amount of work over the same seasons of time.

If a supplemental line is used for each year, vertical lines may be added to show Percentages.

In another example, vertical bars are used to show actual amounts — The higher the bar, the more hours were worked. The darker solid portion at the top of each bar shows the amount of overtime that month.

Lines running across the bars illustrate the different levels of staffing described by the box on the right. Solid lines are actual levels. Dotted lines are projected levels.

This format helps us plan vacations and in-depth training events.

Geo Maps

Google Maps and Google Earth. Yahoo Maps. GPS

d-maps.com provides maps to download in WMF file format to a folder such as
C:\Program Files\BeGraphic\BeGraphic\Content\Maps
BeGraphic can then be used to update any dynamic data-driven map (made of vector freeforms in WMF or EMF files).
Select the option "Delete duplicate shapes". Options

Indexed Trend Charts

help us see the relationship between different types of measurements over time (such as dollars and hours).

In order to put several measurements on the same number system, all measures are recalculated as the percentage from a base level (usually the annual average in 1994).

The values shown on this format is the percent of the annual average in 1994. A value of 100 means that the value is the same as 1994. A value of 200 means that the value doubled.

A gap line clearly shows the difference between two measures. If the dollar spent becomes higher than the hours line, it shows increases in labor rates (from overtime or raises).

Multi-dimensional graphs

The most ambitious approach to representing multiple dimensions on a webpage (a two dimensional plane) was proposed in 1985 by Reginald Brooks. He named his method of presentation LUFE (acronym for Layman's Unified Field Expose), which he calls the "Resetta Stone of physics" — visually illustrating the mathematics used to describe physical concepts, quantities and units in "a simpler, more beautiful form."

Brooks calls it "Naughty Physics"

His compact LUFE Matrix uses a X-Y Cartesian coordinate system to represent the fabric of time and space (the fundamental symmetry of Nature). However:

• Each step in the matrix is an additional step in power. The second step from the center is X². the third step from the center is X³, etc.

• The horizontal x-axis represents spatial dimensions. From the origin, space is negative to the left and positive to the right.
  • S_I is one dimensional linear space.
  • S_II is two dimensional area space.
  • S_III is three dimensional volume (displacement) space.

• The vertical y-axis represents temporal dimensions (T). From the origin, time is positive up, negative down.
  • T_I is one dimensional clock time.
  • T_II is two dimensional time "per second"
  • T_III is three dimensional time "per second 2"

• Areas on the matrix — which Brooks calls STOA (for Space or Time Areas) — defines the physical entity and its units of expression.
  • Velocity is 1 space dimension / 1 time dimension
  • acceleration is 1 space dimension / 2 time dimensions

  Einsteinian physics mixes Newtonian mass with the velocity of light to derive energy.

  But why only three time and 3 negative space dimensions but 10 positive space and time dimensions???

• Each of the four diagonals perpendicular from the center — which Brooks calls STID (for Space Time Interactional Dimension) — presents a different interaction between time and space: (such as frequency (v) — the reciprocal inverse of cycles per second).
  • ST
  • S/T is the velocity of light (c)
  • 1/ST
  • T/S

• Colors are used to represent active Grays represent inactive.

• Hatching of areas (with straight or Swiggly lines, etc.) represent ... The addition (exponential multiplication) of dimensions or The subtraction (exponential division) of dimensions;

Brooks' proofs incorporates all measurements

• Seven base units:

  length	meters	m
  mass	kilograms	kg
  time	seconds	s
  thermodynamic temperature	Kelvin	K
  electric current	ampere	A
  luminous intensity	candela	cd
  amount of substance	mole	mol

• four derived units without special names: volume, area, velocity, acceleration a
• 22 derived units with special names: plane angle radian rad, solid angle steradian sr, luminous flux, frequency hertz Hz, magnetic flux density, celsius temperature, radioactive activity, catalytic activity, electric capacitance, electric conductance, magnetic flux, electric potential, absorbed dose (of ionizing radiation) Gray Gy, dose equivalent, sievert+ pressure (stress, modulus of elasticity) electric charge, force F (tension T) energy (kinetic potential) power (radiant flux) electric resistance (resistance R, reactance X, impedance Z) inductance L, work, illuminance

The LUFE matrix does not consider dimensionless units, which include

• Newton's gravitational constant,
• Coulomb's proportionality constant,
• the permittivity of free space,
• the dielectric constant and
• the fine structure constant

Dimensional Analysis

Data Visualization: Network Diagrams

Network charts can be created using the NodeXL Excel add-in on Codeplex by University researchers using WPF.

Graph data formats include GraphML, Pajek, UCINet, and matrix.

Data Mining tools in Excel include:

• CTree - Classification Tree (using a version of C4.5 algorithm)
• NNClass - Classification Models (using feedforward-backpropagation Neural Network)
• NNPred - Prediction Models (using feedforward-backpropagation Neural Network)

Resources

• Java Library for Real-time Dynamic Data Visualization (DDV)
• $999 ($50 for students) Origin graphing package from Micocal
• WebCensus
• Perseus survey systems
• Research Systems 303-786-9900 announced Interactive Data Language (IDL) 5.1, a 4GL for data analysis and data visualization applications. The product's most significant new feature is ActiveX support, which lets users integrate IDL capabilities (such as advanced graphics and data analysis) with component object model (COM)-enabled environments, including Visual Basic (VB), Visual C++, and Delphi. Other new features include native clipboard support, enhanced TrueType font support, and Basic Linear Algebra Subroutines (BLAS) for rapid processing of large multidimensional arrays. IDL 5.1 runs on Windows NT, Windows 95, Mac OS, UNIX, Linux, and Open VMS. NT prices start at $1500.
• GD Graphic Library (C routines) enables Perl programs to create PNG and .JPG (not .GIF) graphics files on the fly.
• ChartDirector Charting Component and Graphics Library freeware from Advaned Software Engineering for several platforms (C++, PHP, .Net).

$59 Software Metrics: Establishing a Company-wide Program by Robert Grady and Deborah Caswell. Prentice Hall 1989.

Use the word "fewer" when you're talking about things that can be counted, such as individual hairs and snowflakes.

Use the word "less" when you're talking about uncounted general quantities such as hair and snow.