An Easter Egg hunt with three charts
It’s that time of the year. Millions of kids are excited about hunting for Easter Eggs. Why not do the same here on the blog? Below are three charts. All of them are colored according to the season. But there are some problems with each one of the charts. Can spot them? Scroll down to see some comments….
Chart 1 – The Lollipop of Products
The Lollipop - Makes sense?
Chart 2 – The Pyramid of Deception
The Pyramid - Admired for its shape and power
Chart 3 – Walk that line
The trend is your friend? Or maybe not?
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Why stacked line charts are useful
Stacked line charts
Stacked line charts are a great and yet simple tool. Here is why. We often run into a situation where we need to analyze data with different units of measure. Think about a classic but yet simple situation: Vital company data such as revenue, margin % and expenses is used to obtain insights about the past and current performance . One could dismiss this as an easy task and simply review a standard table. But raw data is really tough to analyze. Detecting trends and patterns quickly is almost impossible. Especially with regular data sets that span multiple organizational units
Raw data is hard to analyze. Even simple data sets as this one here.
The other option would be to stick the data into a traditional line chart. But this won’t work in many cases for two obvious reasons:
- The units of measure are different (Revenue ($), Margin (%), Headcount (#), Volume (#), etc..)
- The units of measure have large differences (example: Revenue is measured in millions, travel cost in thousands)
Both cases result in a pretty much useless chart. You can see a fine example right below:
An almost useless chart - What are the margins again?
For data sets containing just two different units of measure, we could alternatively consider a dual axis graph. But I personally find them distracting and many casual users get confused. This is where stacked line charts come in handy.
The power of stacked line charts
Stacked line charts are basically a bunch of line charts that we stack. Why is that useful? Well, take a look:
A stacked line chart - A better option
The stacked line charts allows us to easily identify and compare the trends and patterns in our data. Using this stack is fairly easy. We just have to keep in mind that the units of measure or the scale is different in each one of the line charts. But that should be obvious.
Your analysis
Generating these stacked line charts is really easy with personal analytics tools like Cognos Insight. Spreadsheets typically required us to generate various different charts and to align them manually.
If you haven’t use them before, get started today! Stacked line charts are very powerful, yet easy to use.
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Watch that chart aspect ratio!
The chart aspect ratio
The other day I reviewed a dashboard. It looked great. But there was a chart on the bottom that just did not make any sense. It was way too long and stretched out. As a result, it was very difficult to use it appropriately. And that reminded me: We have to watch out for the chart aspect ratio.
The basic idea
Wikipedia defines the aspect ratio as follows: “The aspect ratio of an image describes the proportional relationship between its width and its height.” It’s as simple as that. We get confronted with the aspect ration when we purchase a TV or computer monitor or when we work with photographs. Does the aspect ratio matter? Oh, yeah it does! Take a look at the two photographs below. The first one uses the common HD 16:9 ratio. I cropped the second one down to a square format (1:1). Do you see the difference in the overall impression of the photo?
16:9 (HD) Aspect Ratio: Can you feel the wide and open ocean?
Square Aspect Ratio: Not that great. The boat has too much visual weight and the ocean does not seem vast and wide.
Your charts
The aspect ratio does matter for charts as well. We have to watch out for that when we create reports and dashboards or when we perform ad-hoc analysis. Not every chart aspect ratio works equally well. Take a look at the two examples below. Both of these charts have problems:
It is difficult to make sense of the data. It is too flat.
The peaks are very pronounced.
The first chart is definitely too flat – it is very difficult to analyze it. The second one is probably a bit too dense. The peaks are extremely pronounced and it would be easy to come to wrong conclusions.
A better approach
What is the idea aspect ratio then? Hard to say. It is typically a good idea to use a ratio that is wider than it is tall (2:1 or something like that). But it depends on what you want to show. From my point of view, it makes sense to experiment a little bit. I have noticed that some visualization experts have issues advice but I have found it to be very academic and hard to implement. To stick with the example from above, I did re-size the graph a bit and finally settled on this chart aspect ratio:
This aspect ratio seems to work best for this data
Your dashboards & reports
Pay attention to the chart aspect ratio. Only because there is some space left in a dashboard does not mean we can or should stick a certain graph in there. The chart aspect ratio does matter quite a bit as we have just seen in these simple examples. Also, try experimenting with different chart aspect ratios when you perform analysis. Resizing charts with personal analytics tools such as Cognos Insight is really simple.
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Freedom to think?
Change that viewpoint
Last summer I participated in a Bavarian wedding.
As a photographer I was really excited to see three traditional alphorn players. The early results looked good on the camera monitor (left photo). At that point I was tempted to pack up and celebrate with my friends. But I resisted and began to experiment with different viewpoints. The final shot ended up as my personal favorite (photograph on the right). Same scene, different perspective. Changing viewpoints paid off.
Business Analytics and Viewpoints
Changing our viewpoint is especially critical for Business Analytics. Read more 
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Visualize This! A book review
Visualize this!
Visualization of data is one of the hottest topics these days. No matter where I go, people are taking a huge interest in it. Infographics are floating the Internet, for example. Companies are looking to refine their dashboards with better visuals. This was also apparent at the Gartner BI Summit earlier this week.
Despite the tremendous attention, there are only a few good books about this topic in the market. One of them is Nathan Yau’s title Visualize This: The FlowingData Guide to Design, Visualization, and Statistics
Great concepts
Yau does a fine job with engaging the reader in the first part of the book. He explains a number of important fundamentals of visualization. This includes a process that he suggests people should follow:
- Get your data
- Ask a question (what do you want to know about it?)
- Choose your visualization tools
- Explore the data (look for trends, patterns, differences, etc.)
- Tell the story and design the visual
There is a lot of relevant information for business analytics professionals in this section. I particularly like that Yau urges his readers to clearly figure out what story they want to tell by visualizing data. This is often forgotten in the design of a dashboard (e.g. do I use a line-chart to show the trend, or do I use a bar chart to show the variances?)
“Approach visualization as if you were telling a story. What kind of story are you trying to tell? Is it a report, or is it a novel? Do you want to convince people that action is necessary?” Nathan Yau
The other chapters
The remaining chapters of the book contain valuable content as well. The author covers topics such as handling data and picking tools for building charts. Several chapters are dedicated towards describing how to best visualize certain problems (e.g. patterns, proportions, spatial relationships, etc.). Each section provides plenty of examples and some good ideas. I enjoyed working through this. But I do have to say that the content isn’t nearly as deep as let’s say Stephen Few’s material.
A good book for BI professionals?
So far so good. There is just one thing that you should know: Many chapters are also full of technical instructions that teach you how to build graphs and charts in the open source package R along with Adobe Illustrator. There is a lot of code in the book. Technical folks might enjoy this. But it is not my cup of tea and most BI professionals will hopefully build their charts using the corporate BI platform. To be honest, I went ahead and skipped those pages.
Visualize this!
Nathan Yau’s book Visualize this! is definitely a good book. I learned a few things here and there and took ample notes. It is also entertaining. However, one has to understand that this is not necessarily a book dedicated towards BI professionals. Rather, this is a book for people who are looking to build infographics and other standalone visualizations. Nevertheless, you can tell that Nathan Yau is passionate about it and he inspired me to hone my skills. If you are looking for a deeper and more business oriented read, I would rather recommend the books by Stephen Few and Edward Tufte.
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Stacked bar charts? Mixed feelings!
Stacked Bar Charts
Part-to-whole analysis is a common task in business. Let’s say we want to analyze how much different product groups contribute towards total revenue. Or we want to analyze our cost across different cost element groups. One way to do this visually is to leverage waterfall or pareto charts. Another popular option is to use stacked bar charts. Stacked bar charts are just a special type of bar chart. Instead of spreading the different categories out across the x or y axis, we stack them. But are they really useful? I have mixed feelings about them.
Single Stacked Bar Charts
Below is an example of a stacked bar chart. This provides an overview of the cost structure for a certain fiscal quarter. You can see that each stack in the chart represents a specific cost element group. The entire stack indicates the total cost.
Is this a good chart? Sort of. Notice how much effort is involved in reading the graph. Comparing the individual stacks requires effort (look at Commissions and Travel, for example). I also find it hard to read the specific values of each stack (how much was spent on advertising?). On the positive side, this chart allows me to quickly identify the total cost. And I obtain a somewhat solid overview of how the money was spent. However, most business analytics platforms like Cognos 10 allow you to hover over a chart section to see the individual values. That makes the stacked bar chart above somewhat more useful.
Another way to display this – and I prefer this option – is to use a regular bar chart. Take a look:
Notice that the comparison of the different cost categories is a lot easier. You can quickly read the individual values and the comparison between the cost elements is easy as well. But I am missing the total of my cost. We would either have to calculate that or include the information in a different manner. The stacked bar chart therefore does not really impress me in this type of setting.
Multiple Instances
So, should we toss those stacked bar charts then? Not necessarily. Take a look the next example. The analysis is now extended to the entire fiscal year. There are multiple instances of the stacked bar chart.
Notice how different this looks. You can quickly see that total cost have increased in the last quarter (after decreasing slightly). I am also able to see how the different cost elements have changed throughout the fiscal year (look at advertising, for example). The stacked bar chart is now much more useful. I personally like this. But what about the traditional bar chart in this situation? Let’s take a look:
The graph invites you to compare the cost composition quarter by quarter. The comparison between different quarters is also not difficult. The only problem with this version is that the overall cost are difficult to assess. Both versions have their strengths and weaknesses.
Stacked Bar Charts – Summary
Stacked bar charts are certainly not bad. But as the examples above show, they are stronger in a multi-instance setting. But even then, you need to be careful: stacked bar graphs tend to look strange when you have negative values (give it a try!). The single stack is not that strong as compared to the traditional bar chart. Both offer different insights. And let’s not forget about waterfall and pareto charts as well.
From an analysis point of view, I would probably want to switch between the different charts. IBM Cognos 10 provide users with the ability to change chart types on the fly. That makes the analysis of data very interactive.
Have you added stacked bar charts to your toolbox? If yes, make sure to use them in the right circumstances.
P.S.: I will take a look at stacked area charts in February.
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Better Forecasting And Budgeting Starts With Analysis – IBM Cognos 10 in Action
FORECAST ANALYSIS
Much has been written about developing better forecasting and budgeting templates or improving the overall process. But to my surprise there is hardly any focus on the role of analysis. I have seen many organizations where managers ‘survive’ the forecasting and budgeting cycle without ever spending time performing meaningful analysis of their data. They simply focus on getting the numbers in to satisfy finance and senior management.
This is a wasted opportunity. People should use that occasion to gain insights about their business. Lack thereof is likely to result in forecasts and budgets that are not meaningful. Some of you might say: ‘Wait a second! Managers do obtain some reports.’ True. They get the classic variance report with a ton of detail. But working with this is time-consuming and it is extremely difficult to identify critical trends and to see the big picture.
A traditional variance report. What does it tell us?
BETTER FORECASTING WITH ANALYSIS
Using a Business Analytics platform like IBM Cognos 10, you can make is easier for managers to gain critical insights. Here are a few ideas that you might find useful. Let’s look at the example of a sales manager for a European division of a global company. This manager has to forecast revenue and associated expense.
1. GO VISUAL
First of all, toss those detailed variance reports. Line of Business managers will most likely not obtain any information from them. Human beings do much better processing visual information. You can find a lot of information about this topic on this blog. So, try to swap out those hundreds of data points with a few meaningful charts. Your teams will be thankful.
2. CONSIDER EXTERNAL DATA
The variance report does not really tell us anything about our business potential. We could therefore consider looking at external data such as market trends. More and more of my clients do that. It helps them with assessing their overall position and it also helps them set realistic but ambitious targets. The example below shows that market growth in Europe is a bit limited compared to North America and Asia.
The situation in Europe is not looking good
3. STUDY HISTORY
History is not necessarily a predictor of the future. But we should not ignore it. We might be able to identify seasonality and to detect general trends. Pick the critical measures. Line charts are usually a great choice to display this type of data. The example below shows that revenue is cyclical and that the general trend is positive:
On the rise: Revenue trend for Europe
4. CHANGE YOUR PERSPECTIVE
One of the nice things about modern Business Analytics tools like Cognos 10 is that we can view data from multiple different angles. Use that capability to your advantage! Try to explore different perspectives. Look at the example above. Now, compare this to the view below. Same data. Just a simple change in Cognos 10:
A different perspective
Our biggest months used to be in summer time. But that has shifted towards year-end. Same data – different perspective. Explore!
5. BENCHMARK YOURSELF
It makes sense to learn from others as well. We could do some internal benchmarking as well. In our example, we could look at deal sizes (looks like Europe’s deals are growing nicely and they are above company average):
The average deal has grown bigger
Ok. That sounds good. But does the deal size come at a cost? Once again, let’s do some internal benchmarking and look at the ratio of expenses and the associated revenue. It looks like Europe is slightly higher which might explain the higher deal size.
Every penny that is earned in Europe requires higher expenses
That information is valuable. It also leads us to think further and to ask some critical questions (Does it make sense to review our spending? Does the higher spending lead to bigger deals?). We should obviously not stop right here.
6. LOOK AT LEADING INDICATORS
What about other non-financial data as well? For revenue budgeting, I might also want to look at a leading indicator like customer satisfaction. And I might also want to look at our track record of winning deals (win-loss-ratio). Take a look:
Customer satisfaction is rising again. A leading indicator for sales?
BETTER INSIGHTS
This is a simple example. The manager is now equipped with a few key insights:
- Market growth is low
- Our revenue trend is still positive
- Buying patterns have shifted
- Our strategy of investing in selling activities has increased the deal size
- Customer satisfaction is increasing which could lead to higher sales
These are valuable insights. And it did not take much time to obtain them. The old variance report would not have provided that insight and it would have consumed a lot of time.
Try to incorporate a few of those ideas in your forecasting and budgeting processes. Doing this with spreadsheets is obviously difficult and probably explains why so many organizations are stuck with the traditional approach. Business Analytics software like IBM Cognos 10 makes it a lot easier to do that.
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Visual Analytics – The new frontier? (Guest Post)
WHAT IS VISUAL ANALYTICS – BY DR JOERN KOHLHAMMER
Massive sets of data are collected and stored in many areas today. As the volumes of data available to business people or scientists increase, it becomes harder and harder to use the data effectively. Keeping up to date with the flood of data using standard tools for data management and analysis is far from easy. The field of visual analytics tries to provide people with better and more effective ways to understand and analyze these massive data sets, while helping them to follow up on their findings immediately, in real-time. Visual analytics integrates the analytic capabilities of the computer and the abilities of the human. This means, the human is empowered to take control of the analytical process; he or she is not just the final stage of a reporting process. Visual analytics sheds light on unexpected and hidden insights, which may lead to innovation and increase profits. For example, many key performance indicators are simply calculated using statistical models. But the true relations between data, models and business objectives often remain unclear. If visualization is included as an integral part of the analysis process then comprehension of the models as well as of the data is increased. Errors in the basic assumptions of the models can be recognized early on and newly discovered dependencies in the data can lead to new and possibly better reporting indices. Read more
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A Cognos 10 Dashboard
Cognos 10 offers a huge library of charts. Several new types were added in the last release. There are now over 160 different charts available. Amongst the new additions, you will also find Stephen Few’s bullet charts. They nicely complement the existing sparklines that were already available in version 8.4. Cognos 10 also provides new and enhanced color palettes that help design beautiful reporting objects. Overall, Cognos 10 offers some really cool options for building effective dashboards.
A SAMPLE DASHBOARD
My colleague and friend Paul sat down last week to quickly create a sample dashboard in Cognos 10 using the new stuff. He took the new charts and also applied one of the palettes. Take a look – I love it! It’s simple but very effective. As a sales executive, I will immediately obtain an overview of my business.
ACTIVE REPORT
Bullet charts and sparklines are also available for Active Reports. You can therefore build awesome looking dashboards for online and offline use. Even better: they also work with the new iPad app.
If you happen to attend BAForum in Las Vegas in a few weeks from now, make sure to look for some the sessions that discuss Cognos 10 and dashboarding techniques in detail.
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The new IBM Cognos Mobile iPad app is nice!
Just a quick post for today. It’s been a super busy week with stops in Barcelona, Munich and London. While sitting in the lounge in Munich, I was delighted to see that the IBM Cognos Mobile iPad app had been approved for the Apple iTunes store. A perfect opportunity to download it and test the offline capabilities at 33000ft cruising altitude. (I cannot wait to take the the app online this weekend!)
CLEAN AND SIMPLE
Once our plane had taken off, I pulled out my iPad and launched the app. European flights do not have WIFI, yet. But the app does support offline content. And so I was sitting there in seat 5D somewhere above Frankfurt and was able to test some of the dashboards and reports. Being able to work offline is a huge advantage, from my point of view. I have personally encountered so many situations where the wireless network was either poor or simply not accessible. But back to the Cognos app: The initial impression is excellent. The interface is nice and clean. It does not take any time at all to get up and running. Navigation is intuitive and all the usual finger movements (swiping, pointing etc.) work flawlessly.
Offline content
