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Top Three Data Visualization Trends in Finance and Accounting for 2023

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Top Digital Visualization Trends

In his classic work, the Visual Display of Quantitative Information, Edward R. Tufte powerfully illustrates the impact that data visualization can have on real-world decisions. In the book, he provides a compelling example of how data visualization can lead observers to discover meaning in data that might otherwise appear too cryptic, ultimately saving countless lives as a result. He provides a second example in which the absence of data visualization leads to the opposite outcome.

In the first case, Tufte describes the discoveries of Dr. John Snow, who lived in London during the cholera epidemic of 1854. Dr. Snow solicited a list of cholera cases from government authorities and plotted the residences of the disease victims on a map of the city. By doing that, he was able to identify a pattern of illness associated with the Broad Street pump, where many of the local residents obtained their drinking water.

Although the exact disease mechanisms for cholera were unknown at the time, there was some suspicion that tainted drinking water might be a factor. Authorities ordered the removal of the pump handle at the Broad Street location, making it impossible for local residents to get their drinking water there. Shortly afterward, the epidemic came to an end. Snow’s visual map of the data provided a unique insight that no one else had been able to see.

The second case in chapter two of Tufte’s book is that of the Space Shuttle Challenger, which exploded shortly after launch on January 28, 1986. The root cause of that disaster was the failure of o-ring seals in the shuttle’s booster rockets.

One especially tragic aspect of the Challenger incident was the fact that the likelihood of o-ring failures was clearly known in advance. Test data clearly indicated that they could fail at low temperatures. Unfortunately, that was not apparent to the decision-makers who chose to go forward with the launch that day. Tufte summarizes his observations on the importance of data visualization: “Had the correct scatterplot or data table been constructed, no one would have dared to risk the Challenger in such cold weather.”

Although these examples come from medicine and science, respectively, data visualization can provide meaningful value in virtually any domain, including business. Let’s look at some key trends in data visualization for 2023.

Trend One: Democratization of Data Visualization Tools

As data visualization tools become easier to deploy, manage, and use, their adoption is on the upswing. In part, increases in processing power that make it possible for the organization, analysis, and (meaningful) presentation of ever-larger data sets are driving increased use.

Trend One

Innovative new tools that reduce infrastructure requirements and simplify deployment and design are also driving much of this democratization trend. A few years ago, for example, deploying and managing a data warehouse required a substantial commitment of highly specialized technical resources, as well as investment in a robust computing infrastructure that could handle the required workloads. Legacy tools required a deep understanding of the source data and careful advance planning to determine the use of the resulting information.

More recently, data visualization tools have grown more powerful and flexible, and are less dependent on specialized expertise. Frontline users who interact with the data on a day-to-day basis can now perform much of the work involved with creating dashboards, graphs, and other visualizations. Today, with the right, purpose-built tools, a power-user from the accounting and finance department can generate more value in less time than a specialist would have required 10 years ago.

Trend Two: A Holistic Perspective

Traditional reporting tools have typically been built around a specific application such as ERP, CRM, or another siloed software system. In other words, stock reporting tools provide a limited view of what is happening in an organization because they are only designed to access information from a single application.

As powerful application programming interfaces (APIs) have become the standard, it has become easier and more affordable to integrate multiple systems. That has resulted in a free flow of information across specialized best-of-breed systems. Many companies, for example, use ERP systems to manage core accounting and operational functions, but use separate CRM software for sales and marketing.

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Unfortunately, that free flow of information does not typically extend to reporting.  When reporting tools are unable to access data across those disparate systems and present them as a unified whole, it hampers management’s ability to gain a clear understanding of where the business is heading. To accurately understand sales trends, for example, it’s necessary to look back at both historical sales (stored in the ERP system) and the sales opportunity pipeline (managed in the CRM system).

In 2023, we expect to see growing demand for reporting and visualization tools that can consume information from multiple applications, harmonize those data, and present them holistically.

(To discover what to look for in a future-ready financial reporting solution, download Five Key Factors to Consider when Evaluating Financial Reporting Software.)

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Trend Three: From Information to Persuasion

Finally, we see data visualization playing an increasingly important role in building clear business cases for new initiatives. Reports are still predominantly viewed as a tool for looking back at what has happened in the past. In the context of data visualization tools, we often make references to dashboards, implying that the primary purpose is measuring and monitoring past performance.

While measuring and monitoring certainly have value, there is an implied focus on the past and present. As analytical capabilities continue to grow, however, we will see an increased emphasis on forward-looking insights. That, in turn, will lead to an expanded role for visualization as business leaders strive to align strategy around a data-driven approach.

Data visualization can and should have a significant role to play in building consensus around new business initiatives that drive strategic advantage.

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