All businesses inherently collect data, but what matters is how they use this information. By taking time to analyse the numbers, we can use data to drive strategy and make better decisions to improve outcomes.
In this Information Age, where large amounts of data are constantly being accumulated, number-driven analytics can, and should, be used to make informed business decisions. According to a survey by tax, assurance and advisory firm PWC in 2016, businesses that used data in the decision making process were three times more likely to experience significant improvements when compared with those that don’t. It also states that data-driven decision making brings together the right combination of “mind and machine”.
To understand how data can improve our business’ decision making, we first need to understand the different ways in which it can be used. Traditionally data is used in an organisation to report or alert the relevant stakeholders to changes in the business, trends, spikes or dips. Although data can be derived from a range of different sources across a business, in my context, these reports mostly take the form of financial statements or monthly management accounts. They show us what has happened in the past, and provides a baseline from which to observe current information. This offers a somewhat backward view as we can only see what happened previously, but have no way to go back in time to rectify it.
However, by adding in-depth analysis of the data to the mix we can understand why something happened and use this information to make more strategic decisions for better outcomes in the future. Analysis enables an organisation to create prediction models and reports to understand how changes impact future outcomes. In short, reporting shows us the WHAT and analysis tells us the WHY. Data drives reporting, which should lead to in-depth analysis, which in turn needs to be shared with decision makers who influence strategy, business tactics or have a meaningful impact on an organisation.
By relying on cold, hard data we can eliminate the potential for human bias and get away from decisions that are influenced by preconceived ideas, suggestions from managers, emotions, or past experiences. Relying on data means that your decision eliminates bias and is supported by facts. Intuition, however, should not be ignored as this in itself is a form data collection.
So how do we use data to make better decisions? All organisations inherently collect and record data in some form or other, the first step is to find out what data you already have e.g. sales history, customer surveys, accounting records, stock records, etc. Analyse the data to identify peaks, dips, and trends understand to identify WHAT has happened in the past. Then, dig deeper to understand WHY it happened. Once you understand the WHY you have the knowledge to influence your decisions, or take action to change things to achieve a more desirable outcome.
Data driven decision making can be used to improve sales techniques and close rates, increase revenue, improve margins and production efficiency and stimulate an environment of continuous improvement in every facet of your organisation.
By Mahomed Bashir – Head of Finance and Facilities, Riversands I-Hub
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