Wednesday, April 24, 2019

The Value of Data Visualization


     Does information visualization provide sufficient return on investment (ROI)? Let us examine the investment value—the estimated financial worth—of providing end-user data visualization. For an organization desiring to depict complex or large data sets in various pictorial or graphical formats for 10,000 users, a commercial visualization product subscription model in which each seat license may cost $50 per month equates to $600,000 per year, not including the labor fee to prepare, implement and maintain the tool.
     Consuming the information on a proliferating number of endpoint mobile devices could further increase costs to more than $1 million, a nontrivial amount in any organization’s budget. The potential outlays escalate when spanned across the federal enterprise.
     Data visualization value, whether expressed directly from straightforward monetized return or subjectively derived from intangible benefits, needs to be assessed quantitatively to determine the economic return to permit a comparison with expected losses and gains from other organizational investments. Without an operationally relevant ROI performance metric, any project expense could be justified to counterweigh the risk of loss.
     Extracting value from data typically focuses on the larger and more expensive issues of management and use of big data, where it is assumed that information visualization is a derived byproduct. Yet when tallied as a separate line of investment, the intended scope of graphically depicted data may not provide enough justification for the production cost and potential difficulties. Consequently, as with any significant investment, the chief information officer and the chief financial officer should conduct a timely review of the data-visualization business case for a quantifiable performance measure of success or failure. For example, a good ROI likely would not involve spending more than $1 million on data visualization to save $200,000.
     Investments in data visualization must compete with other organizational priorities. Determining the ROI is a challenging exercise because it requires that the organization quantifiably measure not only the quality of the tool’s functional characteristics (whether it is accessible, accurate and well designed) but also utilization of the produced information— what can be achieved with better, data-driven management decisions? Too often investment decisions are made, and ROI is not measured, because it is considered unrealistic to expect a quantified measurement of less tangible benefits. The abstract goal of loosely defined long-term benefits then underpins the business case: greater business and customer insight, faster decision-to-answer time, or faster response to customers and markets. However, reducing uncertainty for intangible investments is possible, as indicated by Douglas Hubbard’s Rule of Five (How to Measure Anything: Finding the Intangibles in Business, published by John Wiley & Sons, Inc., 2010 and 2014). This was applied in the investment risk simulation example in my article, “How to Improve Communication of Information Technology Investments Risks,” in the November–December 2017 issue of Defense AT&L magazine. Subject-matter expert (SME) knowledge, supplemented with historical and industry statistics, may be a reliable source for accurate numerical value metrics.
     Most organizations produce or consume data for leadership to monitor performance and answer such basic questions as: “Are we accomplishing our objectives . . . Are we using our resources in the most effective manner ... Are we learning ways to improve our performance?” Some outcomes are relatively straightforward, such as “certifying compliance within a numeric benchmark for system defects that either did or did not decline over time.” For example, the Internal Revenue Service investment in the Return Review Program (RRP) fraud detection system—replacing the Electronic Fraud Detection System that dated from 1994—either does or does not help prevent, detect and resolve criminal and civil noncompliance. A successful system should result in greater success with more revenue returned to the U.S. Treasury to offset the RRP cost.
     But it is more difficult to pinpoint how the data results would reduce risk or improve organizational performance in essential planning, organizing, directing and controlling operations—i.e., identifying the specific business decision problem, the root issue, and how the data visualization investment would help. The answer would then define the metric created to evaluate visualization product cost against expected business results: ROI = Investment Gain/ Cost of Investment.
     To select the best tool for the job, management must first precisely determine how visualization would support users’ efforts to distinguish between evidence-based reality and unsubstantiated intuitive understanding. The tool must present raw abstract data in a manner that is meaningful to users for improving understanding, discovery, patterns, measurement, analysis, confirmation, effective ness, speed, efficiency, productivity, decision making, and in reducing redundancy. Classic approaches for extracting information from data include descriptive, predictive and prescriptive analytics. The most common is descriptive analysis, used as a lag metric to review what has already occurred. Predictive analysis also uses existing data as the basis for a forecast model. Prescriptive builds on predictive analytics, going a step further by offering greater calculated insight into possible outcomes for selected courses of action leading to better decision making. Data visualization of these approaches range from classic bar and pie charts to complex illustrations.
     The approach selected must align with the organization’s senior leader expectations or else the experiment will be short lived. The organization may already possess visualization tools that can be leveraged at little or no additional cost. If the organization is just getting started, a proof of concept pilot approach may be best, initiating a seminal demonstration that can be progressively refined until an effective management tool emerges. The beginning point could be basic metrics to more accurately measure and assess success associated with the organizational goals, objectives and performance plan. Basic example performance measurement of services, products and processes includes:
• Cost Benefit = (program cost avoided or cost incurred) / (total program cost)
• Productivity = (number of units processed by an employee) / (total employee hours)
• Training Effectiveness = (number of phishing email clicked) / (total phishing attempts)
     Performance metrics enable quantitative analysis of whether the tool investment produces sufficient monetary value, fundamentally a risk decision about business outlays. One common method for quantifying risk is: Annualized Loss Expectancy (ALE) = Single Loss Expectancy (SLE) x Annualized Rate of Occurrence (ARO). For example, if the average cost of a phishing and social engineering attack is $1.6 million (M) for a midsize company and the likelihood of a targeted user clicking on the malicious attachment or link is 0.02736, then the risk value = ($1.6M x 0.02736) = $43,776. After weighing the organization’s cyber defenses and history of cyber-attacks, the business-investment decision makers could better determine if investing in employee anti-phishing training and training data visualization is a reasonable risk-reduction expenditure. After the visualization tool has been purchased and deployed, the value of the insights revealed by the analytics must at that point be substantiated through organizational actions—i.e., cause and effect linkage leading to input/process/output adjustments. As a means of generating business intelligence, the organization is then able to weigh the tool’s value, which should be equal to or greater than the production cost. Generally, a more complex visualization results in higher tool cost. The journey from feasibility determination to requirements refinement and then to operational maturity, should be undertaken with the understanding that the initial investment may not be supported by the magnitude of the early results, but total improvement over time should be greater than total outlay.
     In conclusion, managing and mining vast amounts of complex data typically results in the need to view information in ways that are measurably meaningful and actionable to the organization. Added benefits include selective sharing, on-demand viewing and more informed decisions. Information visualization tools range from low cost Microsoft Excel charts to more powerful applications capable of producing relationship and pattern analysis, forecasts, scorecards and performance dashboards from large unstructured data. Organization leaders can then shift from reacting to lag measures towards proactive actions based upon predictive data presentation.
     Data visualization has a potentially significant cost that must be balanced against the payback benefits rather than simply bundled into a data management package. Selecting the best tool for the organization should include basic cost-benefit analysis based upon a performance metric of the value of the decisions made from the information provided.


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