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.
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ReplyDeleteThe post provides a simple example comparing a table of numbers to a visual representation. The visual approach effectively conveys the same information while being more interesting and easier to comprehend, I think you also have to publish a blog on law universities in karachi, this is a very trending topic now a days. Thank you to shares these tips and tricks for creating effective visualizations, including choosing appropriate chart types, simplifying the design, and utilizing tables for detailed data.
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