The limits of data visualization for the Finance Function
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Data visualization (or data viz) has been one of the defining developments in the last couple of decades of the Finance Function.
While data visualization is certainly not a new discipline (consider, for example, the groundbreaking work in this field carried out by W E B Du Bois as early as 1900, and that still looks extraordinarily modern today), it is indisputable that its use has become more widespread.
Indeed, today even the smallest businesses rely on data visualization techniques in one way or another. From multinationals right down to owner-operator shopkeepers, charts and graphs are part of the daily life of business, whether they're generated by bespoke in-house tools or commercial bookkeeping software.
Too much of a good thing?
Data viz is popular because it's useful. Hard numbers are not easy to parse for the average non-specialist stakeholder, and visualization makes it easier for these individuals to understand and derive value from data.
Well-designed data viz practices can be game-changing, and their impact is not in question. Visualizations form the basis of what we might call the 'dashboard revolution', which has brought the power of data within reach of individuals and functions that were previously completely divorced from it.
Data viz is also at the heart of the leading business intelligence tools used across industry and is a must-have for bespoke solutions. There's a high likelihood that your organization places a premium on the availability of high-quality data viz. The reason for this is simple: it helps people understand what's going on.
But data practices are developing and, while the dashboard revolution is certainly not over, it is reaching an inflection point. We are now deluged not only by data but by data viz. We are reaching the limits of data visualization as a tool.
Quality, not quantity
Any tool is only as good as the work that it facilitates. Or, to put it another way, we should judge the tools we use and the processes we implement not by their capabilities but by the value-creation they enable. Judged on these terms, it's clear that data viz is just one piece of a much larger puzzle.
Finance professionals are concerned with supporting and enabling better decision-making and better real-world outcomes for their organizations. There are many circumstances in which data viz helps with this.
But, just as pages of numbers are overwhelming for non-specialist stakeholders, so too are pages of charts and graphs. Given the importance of reporting for the average Finance Function, it's vital that we think about how we are presenting information - and we must recognize that the best way to do this will always be context-specific.
In practice, for many Finance Functions, this is likely to mean a scaling back of their reliance on traditional data viz practices. In the average report aimed at C-suite stakeholders, we might use high-quality visualizations for perhaps three or four fundamental KPIs, in order to provide a top-line view that can be easily read and understood. Beyond that, while visualizations still have a role to play, they are not the only game in town. Instead, we should be thinking about new and more efficient ways to deliver information to different stakeholders and functions, mindful of the fact that their needs and expertise will vary.
The ultimate goal, as I've explored previously, is a self-service model augmented by the expertise of a business partner. In this model, every stakeholder would have access to the data they need, in a useful and comprehensible format, on demand. This would be supported by business partners, who can help stakeholders derive insight from that data and enable better outcomes through their cross-functional, interdisciplinary knowledge.
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Anders Liu-Lindberg is the co-founder and a partner at the Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 115,000+ followers and 195,000+ subscribers to my blog. I am also an advisory board member at Born Capital where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at PACE - Profitability Analytics Center of Excellence where I support the development of new analytics frameworks that can improve profitability in companies around the world.
Director - LMS Advisory, Advising SME's on Growth, Strategic Planning, Maximising Profit & Cashflow. Financial enabler. AI/Tech enthusiast | LMS | KeepMyBooks | WihseFP |Cerebiz |
2yThe dashboard should be like shining a spotlight on the key metrics you are tracking, with some helpful peripheral data if its not distracting. Ideally whatever you can fit on a single-page view. Great article, 100% agree its Quality not Quantity Anders Liu-Lindberg
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2yData visualisation is very helpful in supporting our recommendations without needing a magnifying glass or a degree in accounting. But I agree that it has limitations, Anders, namely the human attention span. The fact that it's easy to present can delude us into thinking that we have space to include more metrics — at this point we reach a trade-off (of information over influence).
Founder | TEDx Speaker | Automating away burnout and building freedom, one system at a time | Digital systems architect to SME leaders and Entrepreneurs
2yWhat do you see as the main limiting factor Anders?