An abundance of available data is transforming organizations and industries, changing the way teams set goals and make critical decisions. However, simply having access to data is not enough to make businesses more intelligent. In fact, data can prove to be overwhelming, distracting and even misleading when it is not handled correctly, leading to mistakes and wasted time and resources.
Still, when used correctly, data has the potential to bring striking new levels of efficiency to businesses. For that reason, its role in organizational decision-making and management is only going to become more prominent in the years ahead, experts say.
“Data is the next wave in business,” said Todd Leyse, president of Minnesota-based Adam’s Pest Control. “Not just collecting it but analyzing it and providing it to all employees in a timely manner and in a way that is easy to understand and is actionable.”
For businesses, the key questions become how to manage the mountains of available data and how to translate that data into practical strategies for steering their operations.
HELPING ‘IN ALL ASPECTS OF OUR BUSINESS’
Organizations and their leaders vary in how they use their data and where they find the most value from it. Justin McCauley, CEO of McCauley Services in Arkansas, said advancements in business intelligence have allowed his leadership team to make smarter decisions while using more information that required less time and effort to acquire. That helps “in all aspects of our business,” he said.
“We can better forecast our production and growth projections,” McCauley said. “Those numbers help us to then anticipate our employment needs and have created a process in which we are proactively hiring team members ahead of or alongside our capacity for work. Therefore, we can determine our vehicle and equipment needs, and so on. We can use our trends to build a very predictable budget.”
Dauphin Ewart, president of Texas-based The Bug Master, said data and business intelligence offer the greatest benefits for him in the area of marketing, citing the reliability of the data and the magnitude of the potential impact. He said using data to produce leads, better spend marketing dollars and strengthen overall sales performance “can make such a big impact for the company.”
Leyse said he believes the industry is still learning what is possible with business intelligence, but he thinks the largest potential benefits center around reducing callbacks and cancellations.
“If we can predict when or how things happen or are about to happen, then we can prevent them from happening, and that impact will be huge,” Leyse said.
Ewart said monitoring data on a routine basis can help businesses recognize trends and emerging problems so they can promptly respond.
“If I see our cost per lead went up by 23% last week, I can recognize it and dig into it and figure out what happened,” Ewart said. “It’s an important part of what data does for us: It drives asking good questions.”
‘A FUNHOUSE MIRROR’
Perhaps the primary challenge associated with effectively using business intelligence is that “you can get tons of data,” said Leyse, whose company built its own software—Blu Star Field Service Management—that incorporates data management and business intelligence concepts.
“The key is what is actionable,” Leyse said. “If you learn your residential commercial mix is 80% residential and 20% commercial, cool, but if you don’t plan on taking any action, what does it matter? On the other hand, if you have a goal and are taking actions, by all means—you need the data.”
Leyse said paralysis through analysis can drag down a company rich with data.
“If you gather too much data and can’t make a decision, it can be really bad,” Leyse said. “To quote Geddy Lee of Rush, ‘If you choose not to decide, you still have made a choice.’ Make decisions and keep moving.”
Ewart cautioned that data and business intelligence do not amount to a silver bullet or a magic wand—”in fact, they can end up being a funhouse mirror.”
“Looking at data to solve everything and trying to just convert everything into datasets—which I think is a mistake that I’ve personally made—can get you away from certain fundamentals,” Ewart said. “Sometimes, the most important thing you can do is walk into the office, shake somebody’s hand and say, ‘Good morning.’”
Ewart said businesses that commit to using business intelligence must also commit to emphasizing data quality. Small errors in data entry can get magnified within larger data sets, leading to misleading results.
“If you’re going to start generating data, you’re going to have to pay a lot of attention to how that data gets generated,” Ewart said. “How likely is that information going to be accurate? If it’s not going to be accurate, then it’s not likely going to be actionable in a positive way.”
TREATING DATA WITH FOCUS AND DISCIPLINE
Because data can be unproductive without a purpose, McCauley said it is critical is to have a goal or objective when using business intelligence.
“We are collecting so much data that it is very easy to get lost or feel overwhelmed when it comes to sorting through and organizing data into information that will have a meaningful impact on your business,” McCauley said. “We start with these questions when analyzing our data: What is it that we are trying to achieve or improve? What do we need to know or would be nice if we did? And finally, how do we measure it?”
McCauley recommends defining five specific goals and the KPIs that track the success of those goals. He also recommends reaching out to peers to help understand best practices in the field and examining your current capabilities to track and mine data.
“This will help you identify strengths, weaknesses and opportunities with insight into where you might need to invest some capital into your business intelligence,” he said.
Leyse advises companies new to sophisticated business intelligence to set benchmarks against good companies, narrowing their focus to specific areas to target for attention.
“From there, you’ll know where you are outside the norm, or outside the guardrails,” Leyse said. “Pick one area to improve and get inside the guardrails. Rinse and repeat.”
Ewart said data is best used “on a pulse.” “By which I mean you’re looking at the same number week after week after week, watching for something weird.” In sorting through data, McCauley said it is important to use a dashboard that brings your company’s key performance indicators together. Automated reports can help you keep tabs on performance.
“You have to find the discipline to review the numbers you’ve determined are important to your goals,” McCauley said. “It’s also important to make sure the right people are looking at the right numbers and understanding their impact on those numbers.”
Ultimately, business intelligence should be approached with focus and a sense of purpose. Ewart said one of the first things a company should ask before investing time and resources in a data project is what they would do with the information if they had it. Just because you can access data, it doesn’t mean your business needs it.
“Would you do anything different tomorrow if you had the answers to your questions?” Ewart said. “Would you actually change anything? And if your answer is no, then you’re just wasting a lot of time.”