The world is driven by data. Every business process, transaction and interaction generates useful information, from how much it cost to carry out to how long it took and its ultimate value or expense to the organisation.
Being able to see that kind of data in a meaningful way, with it related to every other source of insight, takes a business a huge step closer to maximum efficiency and, therefore, enhanced profitability.
There’s a problem though. Achieving that nirvana-like state rarely happens. Various pieces of information reach different people in a company at different times. Some information doesn’t reach them at all because it’s not collected – or it is but its value is not recognised or extracted.
This is not just an issue for the world’s biggest, most complex businesses; it is a phenomenon that affects all, right down to the smallest micro firms.
It has actually always been true that many businesses have failed to collate and act on all of the information available to them. In a digital world, where everything can be measured (ultimately in zeros and ones!) it’s almost criminal not to be making the most of that granular detail.
There have traditionally been two stumbling blocks to changing this state of affairs. The first was the incompatibility of the information itself. Paper-based systems mixed with the introduction of computer programmes, which were often focused only on one task and built using a database or code that couldn’t talk to other crucial systems. This is still very much the case in many industries where special software has been built for a certain purpose, with no thought of it having to talk to other systems.
Even should a business recognise this and be willing to tackle the issues, the next blockage has been in the cost of the computing power needed to crunch all of those numbers. Before any work could be done on the data, it generally needed suitable hardware and licenses to be bought, installed and maintained – only for them to become outdated within a year or two. Having the tools to meaningfully relate the data was also a barrier.
Now though, the potential of on-demand processing power sitting in what has become colloquially known as ‘the cloud’ puts colossal resources at the hands of anyone who has the vision to harness them.
Every piece of data you can capture can be put to work – and it works best when you can put real-time information in front of the people capable of acting upon it.
Take a retail operation. It could be operating hundreds of stores, with thousands of stock lines, open up to seven-days-a-week. It’s highly conceivable that the process of re-ordering stock which has gone low is a manual affair, relying on staff to keep lists and orders to be phoned or emailed through to head office. A busy manager might not get around to that as quickly as they would like, which has the potential to lose days in which the replacement stock is languishing in a warehouse, which in turn ripples down the supply chain to the manufacturer. Every minute a customer can’t buy that product in the shop is a potential missed sale.
But let’s be generous; the world has moved on and those shops may now have an electronic point-of-sale system which tracks and reports stock levels by SKU. Head office has up-to-date numbers and can act on that. However, that’s not the whole story. The data might be interpreted differently if it’s efficiently modelled and related to other critical data, such as individual store turnover, predictions based on historical seasonality data, national trends, even potentially internet memes which will have an impact demand…
All of that information comes from different places, but now we can gather it, properly relate each piece against the others and present it to management in graphical dashboards which give real-time views of what is actually happening in the business. This allows them to act in a rational, coherent and timely way that ultimately translates into efficiency and profit.
The same concepts can be applied anywhere. Throughput of parts, mechanical breakdowns of machines, staff rotas, inflows and outflows of cash, cost per customer acquisition. You name it, it can be measured, reported on and improved.
What is missing in many business sectors so far is the appreciation of the depth of data available and the fact that it can be pulled together and turned into one of the most valuable assets in any organisation. That is, as long as it’s done properly; it is too easy to mistake the relationships in the data and be led down the wrong path, which is why specialists in managing the data are needed and the tools they use are built for the task.
This is likely to be the bottleneck to adoption of data-driven business models, at least in the short to medium term, because this is a specialism which will be in demand when the wider business community wakes up to the opportunity. It will pay to get started early.
The businesses who enjoy the most success in the months and years to come will be the ones who grasp the power and possibility of their data, now that the tools to use it are available and affordable, at whatever scale.