Making it all add up – data is invaluable but only in context…

Yesterday someone demonstrated how useless data is unless it has context and a penny dropped for me, I’ve been talking about collecting data but what I really mean is gathering information. Data is simply a snapshot at a particular time it’s the context of the data and the comparison that makes it meaningful and useful to a business, government etc.

Data is a fact, I guess you could say its imperial and its always true for that moment it was collected, however it was collected and whatever the source. It could be incorrect data because incorrect information was entered into a system but its still a fact.

The thing is in business there are certain measures we need – to understand how a business is operating, whether a profit is being made, cash flow, outstanding debtors, stock levels, run rates on stock, people metrics, performance metrics, productivity, quality assurance and so on. And yet, so many businesses don’t have the systems in place to collect/hold the data and then find it very hard to get the data they need and put it into context to use in making decisions about the business.

Meetings

Very often spread sheets are the tool of choice but these can be flawed yet alone time consuming. Paul North of Illuminis shares a great story about an MD of a medium size business used Excel to produce the monthly reports and pulled together information from 7 different sheets into a summary sheet. Except he hadn’t noticed that one of the sheets was one line different and so the information had been inaccurate for years.

I often have discussions with businesses about the systems they use to collect and hold data and then how they use the data. Mostly the data that’s held isn’t exploited for the good of the business but on the other hand the data that’s collected isn’t usually enough nor is it held in a useful way. And there’s probably different people holding different versions of allegedly the same data in their personal systems and spread sheets because there isn’t a central repository, no agreement of exactly what data will be held and availability isn’t there for those that really need it or at least a subset of it.

One major plc used a whole series of spreadsheets for monthly reporting and weekly forecasts and sales figures and an SME version of an accounting package for its main monthly pack. It took hours and days for the information to be collated but no one took a step back and said what do we really want to know, do we have that information, how accurate is the data and how is it stored?

The same information packs are sent out month after month and function heads and managers then resort to their own data source plus the packs because nothing gives them the information they actually need to understand what’s going on in the business and make decisions. Is that really an effective way to run a business?

Senior executives who have been polled admit to not having confidence in the information they have for decision making but don’t tackle the problem head on.

Its harder for larger businesses to start over but for smaller businesses, whilst it can take time and effort to get the systems in place, its usually easier to start with what it is we want to measure, what is it we want to know when making decisions, do we have that information, how easy is it to get it and how often do we need it. Knowing this before a system is designed is the difference between having information and having strategic information that will support effective decision making.

And its not always about having large, complex, and expensive systems there are many systems out there that are very affordable for a business and the return on investment not only in the time saved but the quality of decisions is realised much more quickly than people think is possible.

There is much about big data in the press, often focusing on very large corporates yet SMEs have equally valuable data. An article in Director magazine talked about a medium sized business that sold racking and storage products which had produced a large and expensive to product catalogue which was sent to existing clients on a regular basis with nominal return. They used their data to find out exactly what products clients had bought and then sent them a cut down catalogue with those products, and associated products. This resulted in a significant increase in sales (the order size and frequency) and massively reduced costs so delivering greater profits. And that was simply because they used the data they had and put it into context to become information that could then be used to make effective strategic decisions.

So what systems do you have? Are you collecting the right data for the business? How are you using the data to make decisions? Food for thought….

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