The Financial and Organizational Benefits of Data Visualization
Are you a people leader in a non-tech industry, or non-tech department within your organization? (E.g. Supply Chain, Automotive, Manufacturing etc. ). Or do you work for a data team that reports to such an organization or department? If so, you might find that despite the spend on tools like PowerBI, Tableau, SAP etc. There is still the prevalence of siloed work, duplicated efforts, different excel sheets for different departments (and in some case for different individuals). It often leads to inefficiency and fragmentation all round.
Now, if this problem has come to your attention and you are looking for a fix. A good place to start will be to understand why Data Visualization important in the first place. What is the need for it?
There is a popular acrostic in change management called ADKAR, the “A” being Awareness. For any change to occur, there must first be the awareness of the need for change. This article aims to awaken awareness on the need for data visualization in your organization.
So let’s get to work. Why visualize data? What is the point?
- Money: This is a bold claim but will be put forward regardless: if you are not visualizing data in your organization, you are leaving money on the table. This is more pronounced if your organization is actually paying for Data Visualization tools. As a basic example Tableau (one of the most popular data visualization tools out there) Pricing is 75USD per Creator, 45USD per Explorer and 15 USD per Creator – all per month). A previous organization I worked for had 10K plus employees. Enterprise pricing is usually costed differently, but going by this user based model, you are looking at minimum $180,000 per year if all employees needed view-only access. If this much money is being spent on a software, and it is not being used frequently, money is being left on the table. There is also the opportunity cost of the money you would have saved from a well made data visualization. Here are two examples of this: In a previous role which supported a manufacturing plant, a simple pivot table displaying what parts were rejected for quality issues with the ability to filter by the reason the parts were rejected provided a means to foster conversations about returns of defective materials to suppliers, and led to about $1 million dollars in cost savings. In another previous role, a visualization which enabled a quick way to view third party vs company owned services in a certain area of the business provided a path to begin the transfer of third party to company owned services, and by doing so save upwards of $10million dollars. These two are good examples of the possible gains when Data Visualization is done right.
- Human Nature: The work of Stephen Few will be extensively called referenced to illustrate this. Stephen Few has done a lot work in the field of Human Perception and Cognition and how that applies to Data Visualization. One basic principle he typically espouses is that humans are naturally better at pattern recognition. Humans have interacted with the physical world for a long time, and as such are designed to easily recognize and quickly process certain attributes of the objects we see e.g. (length, position, size, shape, and color). When we take advantage of this and represent data in this way, it is typically easier to process, rather than reading text off a table. Here is an example that He typically uses to illustrate this: Take a look at the table below. Something like this(i.e. a table) is usually good for “Lookups” e.g. What were the sales for the month of June?
However, when making business decisions, you typically need to answer more complex questions e.g.
– Have sales been rising or declining over the past year ? (the year represented in the table)
– What month had the highest sales? Does this repeat annually?
– Are there any months with particularly low sales?
Now, pause for a moment (no peeking).
Try to answer those questions with the table above.
Now, try to answer those same questions with the graph below.
More than likely, you’ll notice that the answers are immediately obvious, with less mental processing and panning around on your end.
In the words of Mr. Few
“Good data visualization takes the burden of effort off the brain and puts it on the eyes”
When pattern recognition abilities of the human visual system are harnessed, your business decision making is much faster and efficient as a result.
What’s Next ?
With these in mind, your next board meeting could involve creating a simple bar chart or line chart of the quarterly numbers being presented. It would definetely lend more oomph to your presentation. This could even be done on Excel. However, if you have a Data Visualization tool like Tableau and Power BI you might want to embark on a data visualization project, especially if this information is something you are using to make decisions and if you refer to it on a recurring cadence.
NB: This is not to say Data visualization as a silver bullet that will solve all your organizational issues and end world hunger. However, to get Data Visualization right there is a lot that goes into it, data Visualization(when done right) is usually at the tail end of a lot of work e.g. Establishing consensus on a central source of truth such as a database, a master excel sheet everyone agrees upon, an ERP system (Salesforce, Epicor), Data Generation, Data Ingestion, Data Storage, Data Transformation, Interviewing/Requirements gathering etc. All these culminate in the benefits of the visualization at the end of the process.
Trust you found this enlightening. If so exercise your first amendment right and share this with a colleague, let us know what stood out to you in the comments, reach out if you would like a training session in your organization to boost interest and adoption of data visualization.