OK, so, data, we all need it to run our businesses. Yawn. Thanks for the update Fast Four. YOU. ARE. WELCOME! The challenge of managing data in a business is rarely that you don’t have the data, though – it’s normally the exact opposite. You have the data, it’s just that you have so much, in so many places, you can’t do anything meaningful with it.
In this article we provide practical recommendations to decrease data complexity and generate insights that actually drive business growth. (Not yawning now, are you? Didn’t think so!)
Information vs Data
There are two sides to the data conversation, and the biggest part of the conversation is not actually really about data, it’s about information. Don’t confuse the two, there is a massive difference.
Ultimately what we’re talking about when we all talk about data, data-driven, or data-centric cultures is improving the information available to us to drive evidence based strategic decisions. In the words of Donald Rumsfeld, it’s eliminating the “unknown unknowns”, that is to say, the things we don’t know that we don’t know.
Practical Steps to Make Data Work for Your Business
The most common challenge we experience when discussing data with growing, or scaling businesses goes something like: “we have data, too much data, we have data everywhere and it’s out of hand”.
Paradoxically, this is mixed with statements like “we can’t get the information we need”, “it takes too long to get what we need”, “we rely on person ‘x’ to create reports” or, everyone’s favourite “everything is in Excel”.
Understandably, particularly in the early phases of a business, systems and processes are implemented reactively because it makes more sense from a financial and time perspective to just get on with it.
This however often ends up with multiple systems and varying amounts of data in each, specifically focussed on the function they were implemented to address. E.g. Financial systems which have different information about customers than CRM or e-commerce systems. If this sounds familiar, you may enjoy one of our previous posts (How to Achieve Sustainable Growth in Your Company)
So, when it comes to addressing this challenge we have two recommendations:
- Reduce the number of systems and databases wherever possible
This sounds obvious, but the more systems involved, the more complex creating one single picture becomes.
If you can run your entire business on one single system it means that everyone is working from exactly the same data, at the same time. So everything is live for you and your customers – great. From a reporting perspective you can have absolute confidence in your data, and operationally you can quickly adapt and take advantage of opportunities without having to re-map the whole process across multiple systems.
Your ERP (Enterprise Resource Planning) system should normally be the driver for this. As the very name suggests, this kind of system has been specifically developed to manage the resources in your enterprise. Normally, this would start from a core financial perspective which is also a really strong foundation for all future business analysis.
What if we can’t run on one system, or it is clear that different systems for specific functions bring significant operational improvements?
Great question! This is common in scaling businesses and is known as a ‘best of breed’ approach. Best of breed can be incredibly successful but ultimately relies on two key factors:
- Having a well defined data map to understand what data is captured in what system, and how this all comes together to present you the information you need.
- Integration software. If you are going to run multiple systems, make sure they can speak to each other. Without this you are just going to spend a lot of time and money replicating your existing challenges in bigger, more expensive systems.
2. Start with understanding what you need to know, then work out how to get the data
We cover this more in the next section, but ultimately the hierarchy should follow strategic decisions, driven by information, generated from data. So, start by outlining what you need to know in order to run your business and drive the design and flow from there.
Deciding what information you need, and what data is required.
Every business is different, so there is no off-the-shelf set of reports or KPIs which guarantee success. Broadly speaking, we recommend looking for information against three different areas. This information should be live, and visible to the correct people or teams within the business required to drive the required change based on the information:
- Operational Performance: This is about monitoring and optimising whatever it is that you deliver to your customers, how you deliver and how you are performing against your desired standard and your competitors. In ‘Scaling Up’, Verne Harnish proposes the KPIs, traditionally recognised as Key Performance Indicators, could be renamed to ‘Kept Promise Indicators’.
Ask yourself: Can our business and team quickly and easily see how they are performing when delivering to customers? Is there anything we could make more visible to drive improvements in day-to-day delivery, engage our team to innovate without management, or simply ensure blockages become instantly visible and easily addressed.
- Core & Critical Management Reports: These would definitely fall into the more traditional definition of Key Performance Indicators. THese reports are about the ‘now’ and the immediate term. The kind of reports which are literally needed to keep the doors open – e.g. sales by day, month, quarter, bank balance, slow moving stock, resource utilisation etc.
Importantly though, it is key to look at the context of this information, question the standard formats and look at what else you can include to allow you to really analyse this information in the full context of your business. For example, sales reports are great, but sales reports including margin are better. Sales reports including margin per product, region and channel are even better again. It’s all about eliminating the unknowns to drive strategic change.
Ask yourself: Can I easily see all critical financial information about my business in one place? Is it live and can I interrogate it to make improvements whether the information is positive or negative? Is there anything I would like to know when I look at my most important reports but just can’t seem to get the answer?
- Strategic Reporting: This is probably an extension of the previous section. But, rather than looking at the ‘now’, this kind of information is about achieving the long term goals of the organisation. Looking at what is required to help you achieve your 1 year, 3 year, 5 year and 10 year goals? Also, what else could you be doing as a business to generate better income? Not just more income, but more valuable, long term revenue.
At the most basic level, this could be looking at information to spot cross sell opportunities to existing customers based on customers who have purchased ‘A’ but not purchased ‘B’. That’s too easy though, this is about taking your information apart to spot evolution opportunities in your industry, what is next for your business, why are customers behaving the way they are, how easily could you pivot if a competitor was to revolutionize your industry? Could you be that competitor?
Ask yourself: What are our long term goals? What will stop us achieving them? Can I easily see information which impacts this positively or negatively? What do I currently not know about my business? Where else could we generate income and what would be required from our perspective to achieve this? What would it mean financially and operationally to the business to achieve it? Can we do that?
Data is the fuel of information, and information is the engine we use to drive strategic decisions. When discussing data challenges for your business it is important to first identify what information you need to make decisions and drive the required behaviours.
Once you have identified this, look further to see if there is more that you can understand to really drive improvements on your business.
Finally, wherever possible, restrict the number of sources for storing and managing data. ERP (Enterprise Resource Management) Solutions, as their name suggests, have been developed specifically to address these challenges. If you are experiencing challenges with information in your business and are unsure if a system driven approach could help, consider some of the questions from our recent post – How to Achieve Sustainable Growth in Your Company.
It is our recommendation to ensure any solution you consider is developed from a strong core financial perspective. Wherever possible unify data and ensure disparate systems are fully integrated. Not only will this improve efficiencies in your processes but it will ensure that you are always reviewing complete and live data regarding your business.
About Fast Four
We help ambitious companies unlock the power of technology in order to grow. As the first NetSuite Solution Provider in Benelux, we understand better than most the challenges of scaling a business whilst disrupting the existing marketplace.