The amount of data being created each year continues to grow by leaps and bounds. By 2015, the global annual rate of data production is expected to reach 5.6 zettabytes, double the rate of growth in 2012, according to IDC. But for all the data that's being created by people, machines, Internet-enabled devices, and other sources, data doesn't provide executives and other decision makers with valuable insights on its own. The data must be gathered, organized, made interpretable, and then analyzed and acted on to provide any meaningful value.
To make highly informed decisions quickly, organizational leaders need to be able to access and interpret data in real-time. Information, and the ability to decipher and act on it swiftly, has become a competitive differentiator. To identify new business opportunities ahead of the market, business leaders require the ability to access, evaluate, comprehend, and act on data faster and more effectively than ever before.
Data visualization tools and techniques offer executives and other knowledge workers new approaches to dramatically improve their ability to grasp information hiding in their data.
Here are the top five benefits that data visualization offers to decision makers and their organizations.
1. Absorb information in new and more constructive ways. Researchers at the University of Pennsylvania School of Medicine have determined that the human retina can transmit data at roughly 10 million bits per second – about the same rate as an Ethernet connection. But most business intelligence reports that are compiled for senior management are typically populated with static tables and charts that fail to make information vivid for those who view it.
By comparison, data visualization enables users to receive vast amounts of information regarding operational and business conditions. Data visualization allows decision makers to see connections between multi-dimensional data sets and provides new ways to interpret data through the use of heat maps, fever charts, and other rich graphical representations.
Organizations that use visual data discovery are more likely to find the information they need when they need it and do so more productively than other companies.
A May 2013 survey by Aberdeen Group finds that managers in organizations that use visual data discovery tools are 28 percent more likely to find timely information than those who rely solely on managed reporting and dashboards. Moreover, 48 percent of business intelligence users at companies that use visual data discovery are able to find the information they need without the help of IT staff all or most of the time.
2. Visualize relationships and patterns between operational and business activities. One of the key benefits of data visualization is how it enables users to more effectively see connections as they are occurring between operating conditions and business performance. In today's highly competitive business environment, finding these correlations among the data has never been more important.
For example, suppose an executive team for an electronics retailer is viewing monthly customer data. The team is presented with a bar chart that shows that the company's net promoter score (NPS; willingness among customers to recommend a company or its products/services) has dipped by five points over the past month in the Midwestern United States. The data suggest to senior leadership that there's a problem with customer satisfaction in this territory, but don't provide any insights about why NPS scores have tumbled.
By providing a multi-faceted view of business and operating dynamics, data visualization permits the senior leadership team to see that first-contact resolution rates in a Midwest customer call center have recently taken a nosedive, dramatically impacting customer satisfaction.
The ability to make these types of correlations allows the executives to identify the root cause of the problem and act quickly to resolve it.
3. Identify and act on emerging trends faster. The volume of data that companies are able to gather about customers and market conditions can provide business leaders with insights into new revenue and business opportunities, presuming they can spot the opportunities in the mountain of data. Using data visualization, decision makers are able to grasp shifts in customer behaviors and market conditions across multiple data sets much more quickly.
For example, business leaders for a supermarket chain can use data visualization to see that not only are customers spending more in its stores as macro-economic conditions improve, but they are increasingly interested in purchasing ready-made foods.
A deeper dive into customer sentiment and other data reveals an emerging opportunity for the company to launch a catering service to customers who are entertaining more frequently and spending more across related food and beverage categories. Insights like this enable the company to act on this new business opportunity ahead of its rivals.
4. Manipulate and interact directly with data. One of the greatest strengths of data visualization is how it brings actionable insights to the surface. Unlike one-dimensional tables and charts that can only be viewed, data visualization tools enable users to interact with data.
For example, an Excel spreadsheet or a canned report can inform a regional business leader for an automotive company that sales for its sedans are down for a particular month. However, the report won't inform the executive why sales of the sedans are down or whether certain styles or colors are performing better than others. Moreover, the information in the report could be days or weeks old, skewing the accuracy of the data and current sales trends.
By using real-time data visualization and predictive analytics, the executive can view up-to-date sales figures and see why certain sedans are underperforming and the reasons that sales are lagging – for example, discounts offered by competitors.
The executive can then determine the most effective actions to take based on analytical models she's able to develop herself. For example, she might launch a 10-day sales promotion for specific dealerships that are targeted at the most likely buyers with a price that undercuts the competition yet generates acceptable profit margins.
5. Foster a new business language. Another advantage of using data visualization is its ability to tell a story through data.
Consider, for example, business leaders for a consumer packaged goods company who track key performance indicators such as EBITDA and net profit margin. They can gather only part of the story about current business conditions using a static bar chart. The chart might show that the company generated 2 percent revenue growth for the past month, but it doesn't reveal which categories are growing fastest or shrinking, or the reasons why.
A heat map could illustrate which product groups are performing well or underperforming, and allow business leaders to drill down into the data to determine the factors that are shaping sales. The data might reveal that pet-care products are underperforming, but that higher-income customers represent the majority of sales. These insights could be used to target promotions to this customer segment to increase conversion rates and revenue growth for this category.
Engaging executives with data visualization can open up new ways of looking at business and operational data, enabling senior management to scale new heights in business performance while enabling a much broader audience of analytics users in the quest for greater performance.
Brian Gentile is Senior Vice President and General Manager, TIBCO Analytics Product Group, at TIBCO Software Inc. Previously, he was Chairman and Chief Executive Officer of Jaspersoft.
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