How Data Visualization Helps Finance Tell Better Stories

Source: Oracle

Finance teams now have numerous sources of in-depth data that they can use to better track and forecast organizational performance. But having data and communicating it are two different things—and the latter is equally as important.

This is where data visualization comes into play. A new report by Oracle and the American Institute of CPAs (AICPA), Agile Finance Revealed: The New Operating Model for Modern Finance, shows that top-performing finance leaders are more likely to prioritize data visualization skills than their peers.

The ability to explain complex concepts, find intersections of information and present compelling stories derived from data not only elevates finance’s role in strategic decision making, it democratizes data across the organization.

Why data visualization matters

In an article for Harvard Business Review, senior editor and data visualization expert Scott Berinato reports that just a few years ago, data visualization was a nice-to-have skill, primarily reserved for design- and data-minded managers. Today, he says it’s must-have for all managers who want to understand and convey the significance of the data deluge that we’re all experiencing.

This is especially true for finance, which is becoming the data hub of most forward-thinking organizations. Accenture's David A.J. Axson notes in his report “Finance 2020: Death by Digital” that finance is evolving from “an expense control, spreadsheet-driven accounting and reporting center into a predictive analytics powerhouse that creates business value.”

Data visualization helps finance communicate these analytic insights to the broader organization. Consider that 65% of people are visual learners, according to several studies; providing decision makers with visual illustrations of data increases understanding and can ultimately lead to better decisions.

In addition, the actual practice of creating data visualizations can help finance identify additional trends or find even deeper insights – especially when using multiple data sources or interactive features. For instance, modern finance leaders are now often tracking financial and non-financial KPIs. Data visualization can help correlate these metrics, reveal connections and clarify actions needed to improve performance.

Doing data viz right

All data visualization isn’t created equal. Done right, it makes complicated concepts easier to understand. However, done poorly, data visualizations can actually confuse your audience or misrepresent your data.

Finance leaders exploring how data visualization can enhance their analytics efforts and improve communication should keep these tips in mind:

• Invest in the right tech. In this digital era, there are myriad of technology tools that make it easy to create compelling visualizations. First, your organization needs an ERP that eliminates data silos and creates a single source of information. Then look for features that allow you to automatically visualize data by dragging and dropping assets, charts and graphs; offer search functions and guided navigation to help answer questions; and make it possible for anyone on your finance team to create visuals.
• Know your purpose. Before you can create effective visuals, you need to understand what you want to accomplish. HBR's Berinato, recommends determining whether your information is conceptual or data-driven (i.e. does it rely on qualitative or quantitative data). Then address whether your purpose is declarative or exploratory. For example, if you want to show the previous quarter’s revenue, then your purpose is declarative. If, instead, you’re wondering whether your revenue uptick coincides with your social media spend, then your purpose is exploratory. Determining the answers, Berinato says, will help inform the types of tools and formats you’ll need.
• Keep your audience top of mind. The level of detail that your data visualizations demand will depend on who is viewing them. For example, finance data presentations for the C-suite need high-level, highly relevant information that help leaders make strategic decisions. However, if you’re presenting to LOB leaders, then digging into the finer details can provide them with information that impacts their daily operations.
• Enhance your team’s data visualization skills. According to the AICPA report, 60% of agile finance leaders rate their team’s data visualization skills as excellent, compared to just 24% of their peers. While everyone on your finance team can master the basics of data visualization, training and a new hiring focus can take your team’s data visualization competencies to the next level. Find ways to implement user training on data visualization tools so that your team understands the opportunities offered by your technology. In addition, when making new hires, seek out people with data analytics expertise and deep data visualization experience.

The amount of data that finance teams are analyzing has increased exponentially. Data visualizations can help your team more effectively communicate its important strategic insights across the organization.