By Richard Hamje, Senior Strategy Consultant, Mainstay
Estimating the financial benefits from a technology (or any kind of) investment tends to involve a lot of numbers. Determining investment returns, or ROI, requires complex calculations of costs and benefits and is subject to myriad assumptions concerning time periods, interest rates, and so forth. But the end-result, let’s face it, is a bunch of numbers.
Of course, if you're a numbers person, that’s exactly what you love to see. Chances are you can easily extract meaning from a quick glance at reams of financial figures. But for the math-challenged – or just time-challenged – executive or decisionmaker, the bottom line is not so easy to grasp.
Visualizations are a method of making these numbers quickly comprehensible, so they tell a story. In working with innumerable clients, I’ve found that high-level or summary financial results should be shown in graphical form (bar, line, and pie charts) whenever possible. Then combine the pictures with a clear and concise narrative to explain the top-level results, such as ROI. Tables and spreadsheets are still nice to include for detailed cost breakdowns, but it’s often better to put them in an appendix – or least after the high-level results.
Here is a simple example of results expressed as numbers:
Sure, all the information is there, but without context or visualizations, it’s not very informative. There’s no “ah-ha” moment.
Here’s a different approach using the same data:
If ABC Company invests $8, they will save $15. That is a return on investment of 188%! In less than two months, they will break even and all the savings after that go straight to the bottom line. The visualization might look like this:
This conveys nearly all the same information in our previous tables, but it’s much more interesting to look at -- and a lot easier to comprehend.
Want to make the most out of your visualizations? Here are a few tips and tricks:
- There are many types of charts that might be appropriate for the same set of numbers. The one you choose is mostly a matter of taste. You can even use different types in the same report. Here are three different charts showing the same data:
- Modern styling tends toward minimalism. I like to de-clutter my charts and shy away from excessive use of grids, x-y axes, borders, and backgrounds. Simplifying the look helps the chart stand out. If you will be presenting using Excel, PowerPoint or web-renderings such as HighCharts, there is no need for axes. The charts themselves are interactive and will show you the data values when you cursor over or click on the chart.
- For print use (Word or PDF documents), it’s okay to include x-y axes since the chart is not interactive. Whether you use grids or borders is a matter of taste. Just be consistent and try to match the overall design of your document.
- Tables of data are still needed! Just tuck them away at the end. If a question arises about one of the high-level values, those detailed tables will provide the answer.
Certain charts work well for different kinds of financial metrics. For representing cash flows, for example, Column, Line and Combo charts are a good choice. (See the cash flow graphic above for an example of a Column and Line combination). When you are comparing the relative share of a total value, then Pie, Donut and Bar charts are a good choice. (See the first bullet above.)
Sometimes you want to show even more information in one chart -- for example, when you have cash flows that are broken down by category. For these, consider using Stacked Column, Combo (Stacked Column and Line), Waterfall, or Area charts.
Specialty charts are available for almost any type of data. Maps, for example, can be a powerful visualization tool. Radar (also call Spider) charts are useful for maturity assessment findings. Timelines, sales funnels, historical stock prices – just about anything can be visualized. And remember, each one is worth a thousand numbers.
Want to make your numbers come alive for your customers? We’d be glad to show you how to integrate visualization techniques into your financial and ROI tools. For more information, visit www.mainstaycompany.com/sales-consulting.