Five simple analytics tips on how SMBs can gain control over data to run the business smarter
Data analytics is becoming more pervasive as businesses dive deeper into their wealth of knowledge to become more productive, smarter and competent at making predictions. Large numbers of early adopters coming from banking, retail, healthcare and telecommunications businesses, and new entrants alike are using analytics to identify value creation opportunities. Take the healthcare industry for example – a McKinsey report cites that over 200 businesses created since 2010 are developing a diverse set of innovative tools to make better use of available healthcare information.
Keeping numbers from Forrester Research in perspective, data that is accessible to businesses grows at a whopping average of 40 to 50 percent annually. A huge chunk of this information, however, remains untouched as companies in general use less than 5 percent of this data. Small and midsize businesses (SMBs) in particular are inadequately armed to sift through the surged data for gaining valuable insights. The good news, though, is that today’s new-breed SMBs are increasingly aware of the treasure-trove of information that is available in their data. Analysis of this big data can enable SMBs with endless possibilities for business growth.
An effective analytics program that includes collecting, managing, reporting and evaluating data can result in significant operational benefits, with the potential to increase the returns on assets deployed. However, there are instances where SMBs often find sorting and decoding of data boggling, and their heavy investments in analytics half as useful. The challenge is also to be on speed with the amount of data coming from varied sources– posing a compelling question on getting started to put the data to work for business outcome.
A good part of the answer lies in how you approach using the data itself. I see the following five as simple but at the same time most effective approaches for SMBs to manage their data:
1. All your data is not equally important – drive the differentiation!
Figure out what data you actually need from all functions within the company. Match that up with what you have. Then apply the EID (Essential, Important, Desirable) principle to sort your existing data in a way that is meaningful from a usage perspective. If you need data that you do not have, fix a process by which you collect that data. Remember there is a cost associated with storing data – so make sure you collect and retain only the data that you need and you do not collect useless data. Audit this process mercilessly!
2. The best reports are those that give you insights that then lead you to specific action!
Most companies suffer from an “analysis for paralysis” syndrome. We generate thousands of reports – daily, weekly, monthly, quarterly and so forth. We measure our success by how many reports we either generate or receive. Often, many of these reports are duplicated across departments, irrelevant (mostly) and tell no story. A report that tells no story or spurs no action serves no purpose. A good way to judge a report is by asking it the question “So what?” If it answers that question through an action, keep it! Else, discard it! It would be worth your while to take stock of all the reports you have and put them through this process. You will then be left with a few reports that really matter.
3. Key indicators should be just that – keys to the success of your business – identify them and monitor them ruthlessly!
How many times have we come across KPIs that run into pages? Identify the three or four (you could go up to ten, but no more please!) indicators that spell success or doom for your company and monitor them meticulously – every day if possible. For small and medium sized companies – revenue, receivables, sales pipeline, cash locked in inventory etc. could be some indicators. Create a dashboard that pops up on your screen every day so you stay on top of these.
4. Experiment with your data – the results may surprise you!
How many executives in companies are actually aware of the data that they have? How many of them actually “play” with that data. You would be surprised if you knew! And even more surprised if you knew how often such experimentation leads to unlocking “hidden” value in the data. The best part of this is that you do not need complicated tools or statistical packages to get a feel for your data and get it to talk to you. You could start with a spreadsheet and simply “slice and dice” your data – create different views, play with pivot tables and so on. Just try it and you will see the light bulbs going off in your head!
5. Your data is a treasure house – create easy access mechanisms and use data to drive decisions!
Of what use is a treasure if it is stored in an inaccessible vault and you’ve thrown away the key? Create mechanisms by which people have easy access to the data they need in order to perform their jobs more effectively! Drive a culture that thrives on data driven decision making. You will see the difference. Make sure your top management, more than anybody else, has access to data directly – not through an MI team! Push yourself and your management on this really hard! What may start as a chore will soon become an enjoyable habit!
Leveraging analytics for competitive advantage involves more than just investing in technology and experts. It requires a clear assessment and periodic recalibration of the data reservoir to make it appropriate and effective in achieving the anticipated goals.