The amount of data we, as a society, generate is estimated to double every two years. That means in the last two years, the amount of data we produced was approximately equal to all the data previously generated by mankind.
Social media contributes a lot to this growth. Organizations are also generating information in electronic form with increasing intensity. ERP (Enterprise Resource Planning), MRP (Material Resource Planning), CRM (Customer Relationship Management) and e-commerce software, together with publicly available demographic databases, are ripe with the information needed to effectively run an organization.
The key to outperforming your competition is in the ability to organize the data you have, present it in a way that highlights key performance indications, understand the drivers that impact the key performance indicators and have the ability to check whether or not the business decisions you are contemplating are based on evidence that can be obtained from your data.
There has been a lot of hype about Big Data. Companies like Facebook need to manage text, photos and videos from over a billion visits to their site each month. The odds are your organization is not operating in the realm of Big Data, but the data you have is growing, contains valuable information and can be harnessed to provide valuable insights.
Business analytics is the process a company uses to organize its data, present it in a meaningful way, and use it to make decisions that impact the bottom line. In a typical organization, that process happens within various departments. An IT department often maintains the hardware and software used to input, generate and store data. It is often individuals within various groups (sales, marketing, accounting, purchasing, general management) that use the data in meaningful ways to make decisions about how best to move forward.
Business analytics often requires skills of database organization, manipulation, visualization, statistical analysis, hypothesis testing and decision making. It’s rare to find an individual with these skills along with the intuition needed to run an organization or a sub-component of the organization.
By its nature, business analytics is best performed by a team that often includes a combination of technical and business professionals. Technical professionals require the hard skills of collecting, organizing and applying statistics data. Business professionals require the soft skills of using intuition to propose possibilities, and the leadership skills to sell ideas to upper-level management and others within the organization.
During my career as a business unit manager and company leader, I saw that information about key performance indicators, presented in an easy to understand format and provided in a timely manner, is key to success. Paper reports in tabular format generated weeks after the end of the month are no longer acceptable. The state-of-the-art is real-time information on a dashboard highlighting key performance indicators with the ability to drill down on the drivers behind the KPIs to spot trends and opportunities. Database organization and visualization tools and technologies are developing that will allow business to get meaningful information quickly at affordable prices.
The tools and processes of business analytics can be applied to a variety of businesses.
One of the more popular examples was illustrated in the book and subsequent movie “Money Ball.” It highlighted the method used for forming a baseball team based on historical data and statistics about each player.
Another example is Progressive Car Insurance, which many years ago started an advertising campaign about how easy it is to compare car insurance rates. I recall trying the online comparison and was impressed with the information that would have taken me weeks to produce. I really trusted the data when I saw that the rates provided by my current insurance company were quite competitive.
In this day and age, change occurs very quickly. Great companies rise and fall. The ability to spot trends, act on opportunities and avoid catastrophe happens in a timeframe that is a fraction of what it was in the past.
Business analytics, the processes and tools for spotting trends and making solid (data supported) decisions, will distinguish a company from its competitors and ensure its survival, growth and prosperity.
Steven Jones is a dashboard developer, analyst and founder at S.D. Jones & Co. He can be reached at email@example.com.