It has never been easier to capture and generate business data. You will find it in your HR systems, financial accounts and every operational department of your business. It is therefore surprising that whilst data is so easily accessible, most businesses and public-sector organisations make two crucial mistakes with their data.
- They fail to use all information currently at their disposal when making decisions.
- They get drawn into the search for “big data”, as though more data would somehow cure the inherent problem that they have in making decisions.
These two problems are closely related. The truth about business data is that it can be complex and what it means for your business can often be difficult to assess. If managers find that they are not using all their existing management information in a meaningful way, they conclude that they do not have the right data at their fingertips. They therefore look for more data – what Management Consultants have dubbed “big-data”. In our experience, “big-data” does not solve the problems if the business does not already use its existing data effectively. It is more important that you “see the wood for the trees”, rather than plant more trees.
The best strategy for using business data
Data has three important functions:
- To record items which are required to fulfil your statutory obligations (e.g. the tax authorities.)
- To provide you with all the information that you need to ensure that you are running your business as cost effectively as possible. (If not, make operational savings that reduce costs.)
- To ensure that your investment decisions are based on accurate facts, so that you get a return-on-investment (ROI)
Your strategy should to use every piece of data in your business and then go on to increase the amount of data you collect so that you can make even more decisions with it.
If you find that your business regularly collects data that is never used in making a decision, you should consider whether you should dispense with it in the future, to save time and costs.
Implementing a data strategy to use business data
Understanding the true cost of a business is critical when making an investment decision, data from the organisation should always be used to show you understand the true cost and purpose of the business to make the best decision.
The strategy to use your business data can be implemented by carrying out the following 4 tasks:
- Conduct a baseline cost analysis of each function in your business to determine how money is currently being spent. This includes assessing running costs, personnel, capital cost, maintenance etc. It provides a clear indication of current costs and expenditure on the service, building or business.
- Analyse how the current business functions are being performed and how they operate. This includes any statutory compliance measures, key processes and restrictions.
- Ascertain the justification for any proposed investment. This is an important stage in the decision making process and will often be included in a Business case.
- Document the desired outcome of the proposed investment, not a narrow definition of an option to solve a problem. For example, if more space is the driver for a capital investment many would assume the logical answer is to build, however if you only have 50% utilisation in the building next door then why would you want to spend time and money on a large construction project when refurbishing part of a facility would deliver the same outcome quicker and for less money.
Make sure that you collect all data that your business needs, dispense with the collection of low-value data that is time consuming to collect (& rarely used) and finally, base all your business decisions on the significant data available to you.