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Reload this page Business Metrics / Measurements

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


on this pageDimensions of Measurement
on this pageFormats of Presentation
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Sound: “Computer, status report” by Jean Luc Picard of Star Trek

Set screen 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

    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.

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Set screen 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,
    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

    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.

    another page on this site Metrics for measuring computer performance


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Set screen Great Dashboards

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

    Idea 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.

    Idea 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.

    Idea 3. Provide a Legend of Abbreviations.

    Example: "VM = Visitors per Minute".

    Idea 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.

    Idea 5. Highlight peak values and correlate them to events.

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

    Idea 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.

    Idea 7. State conclusions based on facts.

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

    Idea 8. Correlate Different Measurements.

    Macromedia Flash page Infommersion's sample Executive Banking Dashboard

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Set screen 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.

    These major formats are described below. 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.

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Set screen Bar Charts

This bar chart below shows the market share of internet browser versions.

The longer a bar, the greater the market share for that item.


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Set screen Box and Whisker Plots

    Box and whisker plots, such as this notched boxplot from R-Project illustrates the central tendency as well as maximums and minimums.

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Set screen Cumulative Line Charts

show the accumulation of hours, dollars, or other variable over a period of time. The value from a particular period is added to the total from the preceding period.

An example is the exponential growth of Internet domain names from the Internet Software Consortium (

This format helps us visualize the difference in volume so that we can plan major increases to capacity.

If the chart goes from January to December, it is a Year-To-Date Cumulative Chart, where each month's total is added to the total of all previous months that year. Such a chart can be useful in comparing different years.

Different lines for the same time period can be shown on such charts to show different methods of measurement.

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Set screen Trend Line Charts

    Trend lines usually illustrate a countable measure of volume to show absolute increases or decreases over time.

    Trend lines are commonly used to show financial indexes such as the Dow Industrials and the S&P Composite.

    The example here is the Netcraft survey of the software used to run each internet domain.

    Each trend line on the chart shows the result for a different subgroup.

    The problem with this chart is that subtle variations may not be apparent when there are large gaps or when all lines move the same way.

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Set screen Percentage Trend Charts

    Percentage Trend Charts show the pattern in percentages of the same total over time.

    An example is the Netcraft survey on the "Market Share" of various software used to run internet servers:

    Having several sets of variables reveals relative performance during the same period of time.

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Set screen 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.

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Set screen Geo Maps

    Google Maps and Google Earth. Yahoo Maps. GPS 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

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Set screen 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).

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Set screen 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.
      • SI is one dimensional linear space.
      • SII is two dimensional area space.
      • SIII is three dimensional volume (displacement) space.

    • The vertical y-axis represents temporal dimensions (T). From the origin, time is positive up, negative down.
      • TI is one dimensional clock time.
      • TII is two dimensional time "per second"
      • TIII 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

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Set screen 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)

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Set screen 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. included with technical details is a chapter on selling metrics to management, with slides and points to emphasize.

Reminder 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.

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