Key data analysis skills you should learn (Part 3)

So far we have looked at comparison analysis, trend analysis, key metrics analysis and ranking analysis.  The last form of analysis I would like to look at is contribution analysis.

Contribution analysis is about understanding what the percentage contribution of each item is and how it contributes to the total.  The reality is that the human brain is not great at understanding large numbers, so it's much easier to understand percentages.

Percentages are always done in the context of a the total being 100%, so it's very quick to see whether a percentage is a smaller amount like 10% or a large amount like 70% regardless of what the actual numbers are that are used to get the percentage.  

The pie graph is probably the misused and abused visualisation and I generally steer clear of using it, however one place that it can be used appropriately is for contribution analysis and to display the proportion in relation to the whole.  But whenever I teach on this, I always give a few rules to follow when creating pie graphs.  These are:

1. Do not have too many items on a pie graph, limit it to no more than 5 or 6 otherwise your pie graph starts to become very cluttered and difficult to understand.
2. Display the label of the item and the percentage on the pie chart, otherwise all you'll be able to see is how big or small each segment is in relation to the others.
3. Only display percentage on a pie chart not the actual figures, the whole point of a pie graphs is to make it easy to see the ratio of each contribution to the others.