Five Tips on How Finance Can Use Data Visualization to Enhance Value
We’re swimming in a sea of data, and water just keeps flowing in. That’s great news for finance executives looking to improve their analyses of enterprise performance. Getting better analytics and information is the No. 1 ask from finance this year, according to The Hackett Group’s 2018 Key Issues Study. Facing a more volatile business environment, disrupted by technologies and emerging business models, senior leaders must have fast, concise and insightful information to make tactical and strategic decisions.
But the abundance of data has its drawbacks. There’s so much of it, and there are plentiful tools to analyze it. To avoid drowning, finance professionals need to update their data discovery methods as well as how they deliver information to business leaders and management.
The more complex the analysis, the harder it is to convey.
That’s why there’s growing interest and application of advanced visualization tools, in both the data discovery stage and the when it comes time to communicate the results; according to a study The Hackett Group research, broad-based adoption of visualization tools will rise 4.5X in the next 2-3 years (see image below). When we combine mainstream and limited adoption, we see that 80% of our survey respondents are expected to be using visualization tools in 2-3 years.
Practical Considerations for Finance/EPM
Just throwing a bunch of nice picture on a Power Point deck or a management dashboard is not going to influence decisions. What the images must do is tell a story that’s tailored to the needs of the consumer of the information. Creating the images is relatively easy. What’s harder is selecting and validating the data that should be displayed to provide management with actionable insight.
Here are five things finance professionals should keep in mind when creating visual representations:
- Create an information management framework. That means identifying the audience for each dashboard or report, using standardized KPIs, and embedding an alert system within the workflow that flags any deviation from expected performance.
- Align business story board with business context. The pictures must be relevant to their audience. Ask yourself: what does the C-level suite need to know? What does BU leadership need to know? What do analysts and managers need to know? Make sure the story you’re telling is within a context that’s important to them and can trigger action.
- Define the Governance model and Master Data Strategy. In our experience, there are a couple of emerging models. One is based on empowering business analysts around the organization, to create dashboards using certified data and models, approved within a strict governance model. The other is creating a “hub” or a test environment where data scientists and super users can “play” with he data; once they’ve come up with some meaningful insight, the make sure to validate and certify the data before the visualization capability is rolled out to others.
- Incorporate the use of external data. Once of the important benefits of new data management technologies is that they’re able to absorb new types of data from multiple sources. To improve the quality of the insight, finance should pull in external data, for example macroeconomic data or competitor information, to enrich the analysis and the images that tell the story.
- Finally, employ rapid discovery and proof of value. With smart technologies, it’s possible to immediately test the value of visualization tools and prepare a quick business case for the adoption of visualization tools.
The more data we have, the more sophisticated the analyses we perform in finance, the greater the need for simpler, easily digestible ways to portray the data and use it to tell a story. Finance is fast becoming the analytics hub of the organization. Our research shows that either directly or through a center of excellence, it produces the lion’s share of enterprise analytics. With the external environment becoming more challenging, using pictures to tell powerful stories can help drive better and decisions that enhance enterprise performance.
[This blog is based on The Hackett Group webcast led by Sherri Liao, associate principal and leader of EPM/BI Advisory in North America, and Gilles Bonelli, associate principal and EPM/BI leader in Europe]