Anyone with experience presenting data-driven business reporting to decision makers will tell you: presenting the data itself is never enough. Even if your data tells a great story, it won’t make a difference if people can’t see that story.
That’s where data visualization comes in. To understand how data visualization makes persuasive data presentations possible, we sat down with Will Flor, EBM Software’s Senior Manager of Customer Success and Analytics. Will walked us through his data visualization best practices using real financial data visualizations his team prepared using the Catalyst® FP&A Cloud. These anonymized data visualization examples will help you learn how data visualization makes such a difference.
What is Data Visualization and What is It Used For?
Data visualizations are visual representations of data and relationships between data points. Visualizations frequently take the form of a pie chart, bar chart, scatter plot, or graph. By creating clear representations of data, visualization creators tell the “story” behind it with more impact than they could by simply presenting the numbers. “Data visualizations are where most clients want to go with understanding their business.” Will explains, “They’re interactive, automated, and they can be highly analytical.”
Good Data Visualization Examples
The series of visualizations in a financial summary Will prepared for a recent client (pictured below) using Catalyst FP&A Cloud are an excellent example of the information we visualize. It depicts the main line items of the client’s P&L (Profit & Loss) statement to track sales, margin, and Adjusted EBITDA for Month-To-Date (MTD) and Year-To-Date (YTD). This information gives the client a clear overview of crucial aspects of their financial data:
Each cell in the top row features a bar chart visualization. These charts show MTD reports on Sales, Gross Margin, and Adjusted EBITDA, respectively. The dark blue line represents each month’s performance in 2021, while the lighter blue line represents last year’s performance. Using this visualization, the business can see how they’re performing comparatively month-over-month in real time. Below, they can see the same data in a line chart represented year-over-year.
Presenting the information visually in this context is important, not only because it immediately establishes the situation in the clearest context possible, but – even more importantly – because it prepares the report’s viewer to ask the right question: why? What accounts for the clear difference between this year and last year? What should that tell us about how to run our business? Fortunately, Will can use Catalyst FP&A Cloud’s visualizations to answer those questions, too.
How Financial Data Visualization Can Answer the “Why” Questions
This data visualization depicts the EBITDA bridge. “This part of the report pulls EBITDA data back from multiple years in order to “bridge” the client’s adjusted EBITDA from the current year to the prior year or budget,” Will explains, “ to see what’s driving the difference between last year’s EBITDA and this year’s.”
As the EBITDA Bridge vs Prior Year depicts, the client’s 2020 actuals were way down, but after Gross Profit increases (depicted in green), along with added-back Sales & Marketing expense increases, they rose significantly. Even after the three decreases (depicted in red) of Other Income & Expenses, G&A Expenses, and EBITDA Addbacks, the 2021 Actual EBITDA for the reported month was up (depicted in blue on the far side).
The Catalyst data visualization bar chart contextualizes the information presented in the last section. This, in turn, prepares the viewers to understand deeper dives into the data itself. “Next to the bar chart, we can use Catalyst tools to drill down into the P&L at the account level. That lets us see exactly what’s driving the change,” Will explains. “Their stored data is pulled up right next to the relevant information. All we need to do is take a look.” Thanks to the data visualization itself, the overall “story” of the report is communicated as effectively – and accurately – as possible.
Making the Most of Your Visualization Tools
So, how can you make sure your data visualizations are this useful? It all comes down to figuring out the story you want to tell and how best to tell it. To do that, you have to understand both your audience and your data.
“Here, we used Catalyst FP&A Cloud to build our visualizations with the Finance team in mind.” Will explains. “If you’re a CFO, VP of FP&A, or Controller, when you open a Catalyst Visualization, what are the things you care about? What can we build so that in five minutes, you have data on how your business is doing? Catalyst FP&A Cloud makes it easy to answer those questions and surface that information.”
In short, data visualizations should never just be another way to present your data. Instead, use your visualizations to show your audience what they need to know as clearly as possible. The better you know your audience, the more effective your visualizations will be. That’s why EBM Software designed the Catalyst visualization tools with the client in mind from the get-go. The very first page of our sample Catalyst daily sales report is the perfect example:
Data Visualization Best Practices
“At any point, the automated visualizations on this report give the client an understanding of where they can expect to land at the end of the month compared to their budget, prior year, or re-forecast,” Will explains. “Meanwhile, the bar graphs below show them their top 10 and bottom 10 customers compared to any selected scenario.”
Will’s team complied each of these visualizations from the client’s data using Catalyst. Then, they created the data visualizations in the report with the user’s needs in mind. The visualizations give the report’s recipient a “visual shortcut” to understanding what their data is telling them to do. They can spend less time trying to figure out the right move and more time making that move.
“For example, first we’ll present this information alongside data on received orders expected to ship before the month closes,” Will explains. “Then, we’ll use Catalyst to pull out customer and item-level visibility into those orders. That completely eliminates guess work as to where our month will land. Combining information presented by visualizations with Catalyst data allows our client to understand what should be prioritized immediately.”
In other words, Catalyst’s data visualizations don’t just display the client’s data; they make that data actionable for practical, business-specific purposes. This EBM client uses data visualizations to understand which of their customers they should prioritize, where their top performers are and why they’re performing so well, and even what they should do to maximize their profitability day-to-day and month-to-month. Good data visualizations help you run your company better. How will you use yours?
Getting Better Visualizations Today
If you’re interested in the technology to create and automate a better kind of data visualization, get in touch now to find out how EBM Software’s team can help set you up with the customized, automated tools to help you keep making your company better.