An absorbing and thought-provoking book by Hunter Whitney published in 2013, called “Data Insights: New Ways to Visualize and Make Sense of Data”, contains a useful framework setting out some of the primary roles for data visualization.
The framework has the somewhat corny but memorable acronym PEER AT, which stands for “Prompt, Explore, Explain, Relate, Analyze, Track”. I have found this very useful in stimulating groups of finance professionals to think about how visualization can be applied effectively within their organizations.
Let’s briefly look at each of these roles:
Prompt – at its simplest level, visualization can act as a prompt to gain attention and to take immediate action. This is the role taken by many of the instruments on a car’s dashboard, for example the fuel gauge and low fuel warning light. RAG status reporting is also an application of this type of visualization – “Interest cover is red this month as we are in danger of breaching our covenant.”
Explore – this encompasses the new role that visualization is playing in the world of Big Data. It enables us to explore data sets of all sizes to examine, understand and make sense of patterns, trends and anomalies – “Are there any interesting outliers in our salespeople’s performance?”
Explain – visualization plays an important role in communicating insight – “We have been able to hold volumes steady whilst increasing our prices, hence growing sales revenue.”
Relate – visualization enables us to combine data sets from different sources and identify key business messages – “Our sales pipeline and order book is insufficient to cover our revenue forecast for the next three months.”
Analyze – visualization helps us model business driver relationships and analyze specific causal relationships – “A 1% increase in the price of chromium adds $20 million to our bottom line.”
Track – visualization is a powerful tool for understanding trends and predicting the future trajectory – “The Moving Annual trend of margin for this product has reached a turning point and is now on a downward trajectory.”