How Medium-sized Businesses can Use Data to Gain Efficiencies and Solve problems… without Blowing the Budget
Let me guess. You’re a medium-sized business leader reading the news each day watching the amazing gains that companies like Amazon, Google and Facebook are producing by analyzing their data. You lean back in your chair, overcome with jealousy because you know you’ll never have the vast analytical budget they have or the multiple floors of PHD mathematicians that they employ. Deep within you, you feel defeated. How can you possibly compete in this world?
The great news for smaller businesses is that data analysis and graphical visualization tools have come such a long way in recent years with the capabilities and ease of use improving all the time. The market for these tools is highly competitive, so companies that offer solutions in this market have no choice but to race forward in an attempt to stay ahead of the competition. This situation is beneficial for companies looking to buy these tools since the high competition level has brought prices down far enough that every business can afford them.
But what does a company do with these tools?
These tools have become invaluable in being able to “see into the business.” Suppose you’re a company that carries 1500 retail SKUs. Do you know the likelihood of customers buying each SKU? Do you know if you are carrying inventory of SKUs that are only purchased once a year? Extra inventory equals cash tied up that the business can’t use.
Let’s consider another example. Human Resources (HR) departments are using data to track where they find the best candidates. This allows HR to focus its efforts on where it can be the most successful in hiring. In this way, the business gains efficiencies by not wasting any more recruiting time in locations that don’t yield great hires.
In a final example, envision a screen of graphs and information which allow leaders to easily see the overall picture of how the business is performing. If your company is a little larger, imagine such a screen customized to each functional area… a screen for your financials, supply chain, operations and Human Resources.
So many examples could be listed here about using data for decision-making but the important point to understand is that a company will get the most out of data analysis by focussing their efforts on business problems that need to be solved. In the first example, it was about making better decisions on which inventory to carry. In the second example, it was about productivity gains from assessing where the company gets it “biggest bang for the buck” when it comes to hiring.
By now, you’re leaning back in your chair again thinking that this is starting to sound expensive. It can be, but it definitely doesn’t have to be. As an industry expert in this space, I have seen companies spend several hundreds of thousands of dollars on enterprise-wide software solutions for analytics. I’ve also seen budget-savvy companies roll up their sleeves, prioritize what they need to analyze and forget about the rest. These companies intelligently focus on using data to solve the problems that are most urgent for them. This is where you will get the most value out of analytics. Success is not about analyzing everything about everything.
You’re now leaning forward in your chair thinking, “Okay, let’s talk dollars.” There are solutions out there, that if you’re willing to do the work yourself, you can have dashboards of information in front of your leaders for less than $2,000. There are various levels of cost above that where you trade increased cost for additional features depending on how you need to share the information within your employee base.
…and which one do you choose?
As someone who has been in this field for several decades, I can honestly say that there is no perfect tool. As the software companies continue to develop these products, they all turn out to have their advantages and disadvantages, so it comes down to which features and capabilities you need the most. Which data sources do you need to connect to? How much control do you need over who can see the data? How easily do you need to share this data? How often? The best approach is to gather a team of people to put together your wish list and then comparison shop the various tools.
So, which business questions is your company ready to solve?
Tracey Smith is an internationally recognized business author, speaker and consultant. She is the author of multiple books and hundreds of articles. Tracey has worked with and advised organizations, both well-known and little-known, on how to use data analytics to impact the bottom line. If you would like to learn more, please visit www.numericalinsights.com or contact Tracey Smith through LinkedIn. You can check out her books on her Amazon Author Page.