Data Visualization Part II: Determining the ROI
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Data visualization is based on the simple proposition that it’s easier to see connections, relationships, and trends when data are graphically displayed. But how do manufacturers quantify the value of data visualization tools?
Nailing down the return on investment (ROI) for a data visualization initiative is difficult, according to Drew Skau, the visualization architect for Visually, a website community for data graphic designers. If the goal is exploration or optimization, Skau told Tech Trends Journal, “the ROI depends heavily on how much is wrong or could be improved. Some preliminary research should be done in each case to estimate the potential problems that could be solved.”
The ROI is a bit easier to judge on the basis of how effectively the presentation of the data conveys the intended message, Skau said. “Data visualization is a great way to communicate effectively with people. Infographics, when done well, have a high likelihood of going viral.”
Not that this would be compelling ROI for everyone. “If you are a small town plumber, you don't care about reaching millions of eyes on the Internet,” Skau noted, adding that “infographics have still proven to be more engaging and hold attention better than text content.”
As with any initiative, data visualization starts with a clear definition of the business need. “Before a company should even begin looking for a data visualization vendor, they need to establish one thing: what is the business problem that needs addressing?” Scott Benzie, vice-president, marketing and sales for Dundas said
Benzie said companies come to him asking to visualize sales in a dashboard. “Why?” is his response. “More often than not, the root issue is not solved by the initial request, and our clients are looking at completely the wrong metric,” he said. “It doesn’t matter what tools you use to visualize the problem; it is not going to help solve the root issue.”
James Foster, a regional product marketing manager at SAS responsible for visualization and reporting products, told Tech Trends Journal that the ROI for data visualization can be viewed in terms of direct business benefit or improvement, business efficiency or productivity, and IT efficiency.
“The actual return on investment is linked to the overall business challenge being solved by Data Visualization,” Foster said. “For example, organizations that are using SAS Visual Analytics for Campaign Segmentation & Targeting (in a marketing context) might measure the success based upon improved customer response rates, or reduced customer churn. Or the benefit to supply chain efficiency that results in identifying a process bottleneck.”
Foster said a large European manufacturer using visual analytics across their testing program found that the technology “will help identify and predict which components are likely to fail in the field,” estimating that they’ll save “over 20 million euros” from the investment.
The ROI can also be seen when comparing the visualization tool to the company’s previous format for presenting data, such as “manual reporting in Excel, or the reliance on a single resource to create manual/static reports,” said Foster. The ROI would result from “identifying the time benefit and then determining a resource cost for this time, based upon headcount costs or something similar.” He said visual analytics customers “often see a reduction of manual reporting processes from weeks down to hours, which can result in a significant ROI.”
Data visualization can also lead to improvements in IT resourcing, Foster said. It might be related to the costs of previous or disparate reporting platforms consolidated or replaced by the data visualization, or “by the streamlining of infrastructure that is used by these systems, or by the manual, time intensive involvement of IT resources.”
Basically, if an organization uses IT personnel to create, refresh or update reports for business users, that’s a lot of time and effort saved by moving to what Foster calls “a truly self-service visualization platform.”
And the wrong way to measure ROI is by the number of features you get. “Let’s face it. There are a lot of ways to represent data that are utterly useless! Nevertheless, a lot of dataviz companies engage in an endless pursuit of adding more and more visuals, attempting to create the image that they have a comprehensive set of offerings,” Jim Bartoo, CEO of The Hive Group, told Tech Trends Journal.
Many of the added features are “marginal at best, perhaps better used for art work,” suffering from “incredibly diluted focus, never developing enough functional depth in any one offering to be truly useful,” he said.
And instead of providing ROI, Bartoo said, such products end up “creating more problems than they’re solving. It’s a poor way to serve customers.”