Graphics in the Boardroom

Transcribed from the printed issue; not yet reviewed. Read it in the PDF of the issue, page 63

Summary¶

For many years it has been an accepted fact of I.T. that directors are computer-illiterate and that any attempt to provide computer facilities for them is doomed to failure.

This talk looks at some of the reasons why this may have been true in the past and examines some of the issues underlying one approach which is finding widespread acceptance.

1. Introduction.¶

This paper examines some of the underlying issues that have been found to be critical in the implementation of information systems to support Board directors of large organisations. Such systems are now becoming used more commonly and are normally described as Corporate Control Systems. This paper describes many of the issues addressed in the development of resolve – one of the trend-setters in this field.

2. History of computer systems for directors.¶

Until the last few years, there was hardly a company that provided any form of Information Technology for its Board directors – apart from the telephone and a pocket calculator. It was accepted that mainframe systems should be introduced to automate clerical tasks such as sales ordering and working out the payroll. Then some audacious and frightfully bright young things started using time-sharing bureaux to build “models” and incur large bills. More recently all the secretaries threw away their type-writers and were converted to word-processing; sales of “Tippex” tumbled and the company had to buy another shredder. Now the finance department is full of analysts, hot from Business School, beavering away over spreadsheets named after fast cars.

The investment in “high-technology” had by-passed the Board – the people who surely ought to have most to gain from successful applications. The shop-floor has been revolutionised by robots and CAM systems, the ranks of clerks have been replaced by on-line transaction systems, even the good old telephone has gone digital and now lets you do all those useful things like pick up the nearest handset to answer a call. But the Boardroom and the Directors’ offices were left unchanged.

To be fair, there were a few exceptions – pioneering companies whose Chief Executive had insisted that his systems people should build him a system – but they numbered no more than about a dozen, several in the U.S.A. and a handful in the U.K. Notable examples were at B.P. and at Imperial Group, the latter system being described in VECTOR Vol 1, No 2.

Moreover the number of active systems was actually declining. The problem was that they tended to be based intrinsically around the requirements of one individual – the keen Chief Executive. No other senior directors had the commitment to give the development team a significant briefing on their own needs or on their experiences of using the system. As soon as the Chief Executive left, the product was left without a champion and the system fell into dis-repair. Sooner or later its demise was inevitable.

3. Reasons for lack of interest.¶

Several factors combined to cause the distinct inactivity in Director-level information systems. The following are some of the more significant:

Cost¶

Those systems that were developed in the late-Seventies or early-Eighties were notably expensive. Typical costs ranged from one to ten million pounds to support one or a small handful of users. Shared hardware led to unacceptably variable response times so that entire systems had to be dedicated, or other users unceremoniously excluded from access during Executive meetings – even though the system might not be used eventually that day.

Remoteness of D.P.¶

Typically the Data Processing department did not (and still does not) have close links with the Board. Its line of reporting is frequently via the Finance Director who is the one Director most likely to understand and be satisfied with the status quo in terms of routine reporting – if only because it is under his control. To a large extent, D.P. has only itself to blame; its past forays into management reporting tended to provide untidy line-printer output in block capitals on the wrong-sized paper with sprocket holes down the side and covered in strange green lines. The D.P. objective tended to be to computerise the existing system, rather than to try to make more effective use of the information and provide reports as a by-product. It is surely not coincidental that most Chief Executive systems were produced by O.R. (rather than mainstream D.P.) departments (and their track-record in contact at Board level has generally been rather poor).

Inflexibility of D.P. approach¶

The conventional D.P. development approach turns out to be remarkably unsuitable for these systems. Directors do not have the time to spend briefing Systems Analysts on their “needs”, even if they know what those needs are. Rather they are looking for an evolutionary approach, driven by a team who can respond rapidly to feedback and who have the business acumen to initiate relevant new developments. Above all, they are impatient for results; after all the commercial environment won’t wait while the detailed system specifications are drawn up!

Lack of suitable development staff¶

Following on from the previous point, few firms have staff with the suitable blend of technical experience and financial expertise needed to develop a successful system with minimal direction from above.

Techno-phobia¶

The typical director may well be in his fifties with no personal experience of computing. Even his children will have left school before the advent of the home computer. His experience of technology is probably limited to the telephone, the bank’s cash machine and the infra-red controller for his video-recorder. Not only are the directors likely to be the least computer-experienced user group; they are the one group who can vote with their feet. If they decide that a system is unacceptable, there’s no boss to tell them they have to use it.

4. Critical factors¶

As with any system, there are a wide range of issues which have to be considered in developing a Corporate Control System. The following are some that have been found to be pre-requisites for successful implementations.

Relevance¶

It goes without saying that the system must address the key issues facing the Board and that the facilities offered must reflect the styles of use of Directors. The problem facing the developer is how to identify these from the necessarily limited access to the small number of users. It turns out that an in-house team faces an almost insuperable task and most organisations decide to involve one of the small number of external consultants who have direct experience of working at this level.

Ease of use¶

The entire system has to be designed to provide ease of use. It is unrealistic to expect a director to have the time or the inclination to read through a weighty reference manual. Considerable research has been carried out into many behavioural issues affecting use of systems; even the presence of a full keyboard can introduce associations with secretarial functions which may cause problems. These ergonomic factors are exacerbated by the importance of using the system during meetings (without technical support) and the prestige value of using the system to show journalists and financial analysts how well the company is managed. The Chairman’s office is not only his work-place; it is also a show-piece of the entire organisation.

Other issues affect ease-of-use; in particular directors want to be offered choices that are related to their business concerns rather than technical issues. It is important whether they look at a short-term or a long-term trend; they don’t have the time to specify what colour they want each line displayed in, nor generally whether they want a line-plot or a histogram. A good Corporate Control System should make such decisions for them in a consistent manner.

Availability¶

However good a screen-based system may be, paper-based output is also essential to form the basis of one-off as well as routine reports. This is frequently the starting-point, but more ambitious users rapidly install colour graphics terminals in directors’ offices for individual analysis of corporate performance. The next move is often to introduce large monitors for group discussions, or, better still, to provide video-projection facilities in the Boardroom. Now that portable microcomputers are available, many directors like to be able to take their corporate database around with them, either on visits to subsidiaries or for work at home.

Support¶

One of the critical factors in successful Corporate Control implementations has been the quality of user support offered and the skills required of the support team. Ideally support should be centred on a “system manager” who has overall responsibility for the system. Normally this individual is chosen for his financial rather than his technical expertise, although he obviously needs occasional recourse to computer experts. The pivotal nature of this role arises from the fact that the directors want to have a single point of reference for any queries they may have and these queries may relate to hardware problems, software issues, discrepancies or inconsistencies in the data provided or the accounting treatment of some of the figures, or genuine difficulties in the business being examined.

Adaptability¶

One of the key considerations is the retention of adaptability. Corporate Control applications are necessarily evolutionary; the limiting factor on system development tends to be the directors’ requirements on the system, rather than technical obstacles or mere inertia. This has been a major consideration in the choice of APL as the development language for several Corporate Control Systems.

5. Directors’ Information Project Stages¶

The evolutionary nature and the expectations of the user-base have led to the refinement of the recommended stages during the creation of a Directors’ Information System.

The Design Phase aims to create a prototype system, providing the initial stab at the full corporate structure, but concentrating data coverage on a chosen part of the organisation. The aim is to give directors a working, though deliberately limited, tool so that they can evaluate the efficacy of adopting this new approach at an early stage. Technical issues are addressed to ensure that they do not present insurmountable obstacles to subsequent full implementation. The prototype is normally used to produce special report packs focussing on issues of genuine interest and to support executive committee meetings.

The next step is to proceed with the Implementation Phase. This extends the data coverage to the full corporate structure and integrates the Corporate Control System with any data sources so that the monthly updating process becomes a routine operation. There is also extensive training both for directors and for the system manager.

The third stage is the Review Phase. After a few months experience of use, it is possible to evaluate feedback on how the system is being used in practice. The monthly Board report may need to be redesigned to reflect the changing management style brought about by using the system. Experience frequently suggests revisions to the information covered by the system, and there may have been changes to the underlying corporate structure. In any case the style of use will vary according to the time in the company’s financial calendar – whether the main theme is reviewing next year’s budgets, evaluating the strategic plan or concentrating on the routine monthly reporting.

6. Design issues.¶

In terms of the detailed system design, there are a host of factors that need to be incorporated to ensure acceptance.

Access to data¶

The Corporate Control System rapidly becomes the master system for the provision of corporate management accounting and reporting information. It is essential that it becomes an integral part of the reporting process with electronic links wherever possible to allow automatic updating of data. Attention must be paid to ensure that data are timely and accurate.

Consistency¶

It is essential that the data made available to directors in their office is wholly consistent with the figures presented in reports. It normally becomes desirable to produce as many reports as possible directly from the Corporate Control System.

Corporate structure¶

The system must reflect the management’s own view of their organisation. This structure has to form an integral part of the system and provides one of the key methods of data selection. The structure is, of course, fluid, and the system has to provide an easy means to revise it, allowing for restructuring as well as handling the acquisition and disposal of subsidiaries.

Timeliness¶

The updating of the system has to be fully integrated with the routine management reporting process. System management has to be as closely regulated and time-tabled as the accounts department so that the update to a director’s system coincides with his receipt of the Board report pack.

Graphics¶

Above all, directors are looking to understand the messages underlying their corporate information, not just to know the numbers. A major role of the Corporate Control System is communication, with the Finance Director, say, explaining to his colleagues the likely impact of problems in a part of the Group. The case for graphics has been made elsewhere, and it suffices to say that effective graphics form the core of any successful Corporate Control System.

Design¶

Graphics on their own are insufficient to ensure a successful implementation. Considerations of ease-of-use (discussed above) lead to the “chart-book” approach, where a range of carefully-designed chart formats are provided with an integral link to the underlying corporate database.

The issue of graphics design is a vast and complex area touching on issues of creativity and “feel” as well as objective factors. Many of the design criteria were described in a previous article (see reference 1) and readers are recommended to follow up Ehrenberg’s article (reference 2) and the book by Tufte (reference 3). In this paper I propose to mention only those factors that have proved to be most important.

Firstly the charts should be relevant; they must convey the important messages underlying the data. Many a time I have heard a director look at a chart and say “Well, you can’t argue with that!” Because the principles of effective corporate control are independent of the organisation, it has been found empirically that a reasonably standard range of chart formats can apply. It is perfectly reasonable, and in many cases advantageous, to use the same format to present sales turnover figures as is used for sales volume, or cash flow. Most important is the immediate and automatic access to the correct data.

Secondly the information must be accessible. It must be physically accessible in the sense that it is available in the Director’s office and for group discussion at committee and Board meetings, and on a portable system for use at home or on business visits. It must also be psychologically accessible; anybody at the meeting should feel comfortable using the system to support their point of view in discussion. This requires more than the traditional view of “user-friendliness”; equally important is a sense of confidence that the underlying data are correct and that the form of presentation will be relevant. Similarly, the language used should be that of business not technical jargon, whether of computing or statistical origin.

Thirdly the system must be consistent. Apart from data consistency which goes without saying, the forms of presentation must be consistent. Graphics already bring benefits in terms of rapid assimilation of key messages; these benefits become even greater if the user does not have to learn how to interpret each chart. Hence the attraction of the “chart-book” approach, allowing the user to select his combination of chart format and data series. Moreover there should be consistency between chart formats – consistency in choices of colours and line-types and in the general style of presentation. For instance in RESOLVE the colour green is reserved for Budget data; wherever a director sees a green bar in a histogram, or a green line, he doesn’t need to refer to the chart legend to find out that it refers to Budgets.

Finally the presentations should be attractive. This may sound a trivial issue, but frequently these types of system are shown to outsiders, either financial analysts or journalists. And, anyway, the directors have a difficult enough job running their businesses; what right have we to make their lives harder by presenting them with anything less than the best? They may simply decide they’d rather not use the system at all.

7. Conclusions.¶

The development of a system such as RESOLVE has required a wide range of skills, in particular an attention to detail and an ability to balance the technical possibilities (and temptations!) against the realities of running a large organisation. I am sure that there must be others who have had to face similar issues, no doubt in different application contexts, and I am keen to establish a forum where they can be discussed. Any interested parties are invited to contribute to the debate, either by contacting myself directly or through contributions to VECTOR.

References.

1. “Graphics for Decision-Makers” by David Preedy, VECTOR Vol 1, No 2, Oct 1984, pp83-88.
2. “Rudiments of Numeracy” by A.S.C.Ehrenberg, J.R.Statist.Soc.A Vol 140, pp277-297.
3. “The Visual Display of Quantitative Information” by Edward R Tufte, (1983), published by Graphics Press, Cheshire, Connecticut.