The Importance of Data Visualization to Business Decision Making

by Rebeckah Blewett

 

1.0 INTRODUCTION

Informed decision making is the foundation upon which successful businesses are built. As a decision maker for your business, you need access to highly visual business intelligence tools that can help you make the right decisions quickly. As your organization grows, so does the amount of collected information. If this data is delivered to you in spreadsheets or tabular reports, it becomes more and more challenging to find the patterns, trends and correlations necessary to perform your job well.

Effective data visualization is an important tool in the decision making process. It allows business decision makers to quickly examine large amounts of data, expose trends and issues efficiently, exchange ideas with key players, and influence the decisions that will ultimately lead to success.

The practice of representing information visually is nothing new. Scientists, students, and analysts have been using data visualization for centuries to track everything from astrological phenomena to stock prices. Only recently, with the adoption of more sophisticated BI technology in the corporate world and the ever-increasing practice of data collection and data mining activities, has data visualization in the form of dashboards been used as an important presentation tool in business analysis. As a result, the use of dashboards in making quick and accurate business decisions has become an essential requirement for remaining competitive.

2.0 COMMON FORMS OF DATA VISUALIZATION

Basic Charts

The most recognizable and utilized form of data visualization is the basic chart. Line, bar, area and pie charts represent the most common types of this form. The first function of a good chart is to allow decision makers to examine the data and reduce the time required to extract key information. 

Figure 1 - Line/Area Combo chart comparing sales cycles for current and
previous year to demonstrate patterns and trends.

Figure 2 - Pie Chart displaying the distribution of
reasons that purchasers have made a decision to
buy a particular product.

Status Indicators

In addition to basic charts that visualize a set or sets of data, status indicators are also a commonly used visualization to indicate the business condition of a particular measure or unit of data. These indicators can take on many forms, including gauges, traffic lights or symbols. Status indicators become even more effective when they incorporate contextual metrics, such as targets and thresholds, because they can provide quick feedback as to whether a specific measure is good or bad, high or low, below or above target.

Figure 3- This scorecard uses status indicators to demonstrate how
well each regional call centre is performing compared to target.

Advanced Data Visualizations

More advanced examples of data visualization include scatter graphs, bubble charts, spark line charts, geographical maps, tree maps, Pareto charts, and many others. These more sophisticated visualizations are designed to display data in ways tailored to a specific function or industry.

Figure 4 – A tree map that uses size and color to indicate
distribution of sales (size) and performance against target (color). 
In this case, the color gold indicates best performance.