Data and analytics for performance - Dashboards, KPIs, and a...

Learning Outcomes

After reading this article, you will be able to explain how dashboards, key performance indicators (KPIs), and automated variance analysis are used in management accounting to support performance management. You will know how data visualisation tools present information, why KPIs are chosen for reporting, and how automated variance analysis helps monitor results and drive management action.

ACCA Performance Management (PM) Syllabus

For ACCA Performance Management (PM), you are required to understand how data analytics and visualisation support performance assessment and control. This article will help you revise the following syllabus topics:

• Interpret and use management information for monitoring and control, including the presentation of KPIs via dashboards.
• Explain the importance of data visualisation in reporting to management.
• Understand how automated variance analysis supports timely, actionable management information.
• Recognise the role of dashboards, KPIs, and variance analysis in performance management systems.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which tool allows managers to monitor several KPIs in real-time on a single screen?
   1. Data warehouse
   2. Dashboard
   3. Executive information system
   4. Standard costing
2. What describes a performance indicator that measures a business’s success in a critical area?
   1. Dashboard
   2. KPI
   3. Sensitivity ratio
   4. Control total

3. True or false? Automated variance analysis provides immediate feedback on deviations from standards, reducing reporting delay.

4. Why is it dangerous for organisations to focus only on financial KPIs on a dashboard?

5. Briefly explain the main advantage of automating the variance analysis process.

Introduction

Effective management accounting relies on more than calculating costs and variances. It also requires converting large quantities of data into actionable information for decision-makers. Modern organisations increasingly use dashboards, KPIs, and automated variance analysis to track performance, present findings clearly, and trigger timely management response.

This article reviews the role of data visualisation and automation in reporting and control. It shows how dashboards condense complex data into understandable formats, how KPIs drive management focus, and how automation accelerates corrective action.

Key Term: dashboard
A visual display that condenses and arranges on a single screen the key information needed to monitor performance, often showing KPIs and trends in real-time.

Key Term: key performance indicator (KPI)
A quantifiable measure, selected by management, that reflects how well an organisation is achieving its critical objectives.

Key Term: automated variance analysis
The process where software rapidly calculates and highlights differences between actual and planned performance, often flagging issues for immediate attention.

DASHBOARDS IN PERFORMANCE REPORTING

Dashboards are now common in many organisations. They present the results of data analytics, offering a snapshot view of performance. Dashboards combine various KPIs—financial and non-financial—into one screen. This helps managers quickly spot trends and outliers.

Essential features of a dashboard:

• Real-time updates or scheduled refreshes.
• Comparison of current KPIs with targets or historical values.
• Visual aids such as traffic lights, gauges, and charts for quick interpretation.
• Drill-down capability to investigate problem areas.

When designing or interpreting dashboards:

• Prioritise actionable KPIs.
• Avoid overloading with excessive data.
• Ensure that each KPI aligns with key business goals.
• Include narrative or alerts where action is required.

Revision Tip When reviewing a dashboard, ask which KPIs signal required management action and whether any critical aspect of performance is missing.

KEY PERFORMANCE INDICATORS (KPIs)

Selecting relevant KPIs is essential for meaningful performance management. KPIs should be:

• Specific to organisational objectives.
• Quantifiable and easily measured.
• Relevant to users of the report.
• Regularly reviewed to ensure continued relevance.

KPIs may be:

• Financial (e.g. gross profit margin, ROI)
• Operational (e.g. production defect rate, on-time delivery)
• Customer-focused (e.g. number of complaints, customer retention rate)
• Employee-focused (e.g. voluntary turnover, training hours)

KPIs are used for:

• Benchmarking against targets or competitors.
• Early warning of issues.
• Directing management priorities.
• Supporting reward or incentive systems.

Worked Example 1.1

A dashboard for a customer service department shows these KPIs: average call wait time, first contact resolution rate, and customer satisfaction score. The first contact resolution drops below target. What should management do?

Answer:
Managers should drill down to see which teams or agents have the biggest drop. They may review training, staffing, or process changes to resolve the decline and prompt corrective action. Exam Warning Do not include too many KPIs on a dashboard. Excessive information dilutes management focus and may cause important actions to be missed.

DATA VISUALISATION FOR MANAGEMENT DECISION-MAKING

Data visualisation turns numerical data into usable graphics—charts, graphs, maps, and bridge diagrams—making trends and issues easy to spot.

Common visualisation tools:

• Line charts (trend over time)
• Bar/column charts (comparisons)
• Waterfall/bridge charts (explaining changes, e.g., profit movement)
• Pie charts (proportions—limited use for performance data)
• Traffic lights and icons (status at a glance)

Key Term: data visualisation
The use of graphical techniques to present data to management so that information and trends are clear and actionable.

Automated data visualisation:

• Reduces manual report preparation.
• Allows immediate access to current data.
• Supports interactive drill-down for analysis.
• Highlights exceptions for fast management action.

Worked Example 1.2

A finance manager creates an automated bridge chart to show the causes of profit movement from last year to this year. The chart automatically imports data, so each new period’s changes are broken down by revenue, raw materials, wages, and overhead variances.

Answer:
The bridge chart visually presents the main profit drivers, and the automation ensures updates are immediate. This helps managers identify which category requires further investigation.

REVISION TIP

Use trend charts to quickly identify if a KPI is improving or deteriorating, rather than relying on a single period’s value.

AUTOMATED VARIANCE ANALYSIS

Automated variance analysis uses accounting software to compare actual results to standards or budgets without delay. Instead of waiting for manual calculations, systems flag adverse (or favourable) variances and prompt investigation.

Key benefits:

• Shortens the reporting time lag; variances are highlighted as soon as data is entered.
• Focuses management attention on significant or recurring deviations.
• Reduces calculation errors and ensures consistency in approach.
• Supports exception-based management—only variances outside tolerance trigger actions.

Key Term: exception reporting
A management system that highlights only those results that deviate beyond pre-set thresholds from a standard or target.

Automation supports regular processes:

• Stock and sales variances are calculated after each accounting period close.
• Automatic alerts for production, procurement, or cost variances.
• Connection with dashboards so unresolved variances display as open items.

Worked Example 1.3

A manufacturing company sets up an automated system to run variance analysis at period-end. The dashboard highlights adverse materials price and usage variances that exceed $5,000. When the procurement manager logs in, they see an alert for a $7,200 adverse variance caused by supplier price increases. The system links to the source purchase data for review.

Answer:
The procurement manager receives real-time notification and supporting detail, enabling immediate investigation and corrective action.

Exam Warning

Automated variance analysis is only as good as the accuracy of input data and the suitability of set standards. Out-of-date standards or poor data will result in meaningless variances.

Summary

Dashboards and automated analytics transform how performance information is delivered. Timely, visual reports support informed management action. Careful KPI selection, effective data visualisation, and automated variance analysis combine to deliver a structured, actionable performance management system.

Key Point Checklist

This article has covered the following key knowledge points:

• Explain the function of dashboards in performance management and reporting
• Identify characteristics of effective KPIs and the risks of unfocused reporting
• Describe how data visualisation supports management analysis and decision-making
• State the advantages and risks of automated variance analysis in practice
• Understand the importance of timely, relevant information in performance control

Key Terms and Concepts

• dashboard
• key performance indicator (KPI)
• automated variance analysis
• data visualisation
• exception reporting