11.28.2018 | Berdon Industry Insights
The “big data” revolution is a game changing development that continues to evolve. Now is the time for businesses to begin planning how to capitalize on the latest developments in the field of data analytics, in order to effectively compete and get ahead of the competition.
Now more than ever, organizations are faced with the challenge of adapting to changes in technology in order to stay relevant as well as achieve their strategic and growth objectives. In the current social media age, companies are inundated with a tremendous amount of data. For instance, social networks provide gads of feedback on customer service and products, while internal pricing and supply chain databases often leave small- and medium-size businesses awash in a sea of seemingly disparate streams of information.
Only recently, however, according to a study by the International Institute for Analytics, companies “often confined their analytical efforts to basic information domains, like customer or product, that were highly-structured and rarely integrated with other data.” But times are changing. In the current environment, companies are now pushing the science of data analytics further, in the hunt for new insights, products, and services.
Therefore, the big question that a small- or medium-size business faces is this: “How do you harness the latent power of all of the data available in order to drive growth, create efficiencies, and plan for the future?”
The answer is to develop ways to assemble, integrate and unify data, and then analyze it, in order to take advantage of its potential. In other words, by establishing a robust program of Data Analytics.
Benefits of Implementing a Data Analytics Program
Over the past several years, dozens of case studies have shown that implementing a data analytics program can pay big dividends. According to one Harvard Business Review study, companies that pursue a program of data analytics have seen a five to six percent increase in productivity and profits.
Still, more intriguingly, utilizing data analytics can present a variety of opportunities that help achieve a number of critical goals for companies.
For instance, integrating data analytics can assist companies in:
- Identifying patterns in consumer and market trends, by analyzing customer-buying profiles
- Spotting needed changes to business operations and strategies
- Uncovering future growth patterns, by utilizing historical data
- Identifying profitability by product, season, geography, employees
- Increasing efficiency, by providing management with an understanding of where a company is most efficient and where it should improve
- Identifying new customers, services, products
- Improving employee retention
- Expanding potential opportunities for new investments
- Cutting down on unnecessary costs
With all the potential benefits, it is no surprise that data analytics has become increasingly widespread. Business owners and decision-makers are now taking on the challenge of developing and implementing plans to utilize data analysis as a valuable decision-making tool. Indeed, according to a study in The Journal of Accountancy, companies that ignore data analytics may even be “forced out of business in the long run.”
At its core, data analytics is related to the gathering, assembling, and maximizing of a company’s data in such a way as to hugely benefit the business. And for most companies, the volume of data available continues to grow. However, the value in the data is not the volume; rather, it is the way in which the data is translated and used to make strategic business decisions. In order for business owners and decisions-makers to successfully integrate data analytics, it is important to understand that the process should result in more proactive decision-making.
The implementation of data analytics also provides an opportunity for various departments to work together to provide actionable insights and added value to a business. For example, accounting, IT, and marketing can collaborate and integrate certain data to help identify potential new opportunities, market trends, patterns in customer behavior, and other ways to bolster their company’s competitive advantage in the marketplace.
Challenges Involved with Implementing a Data Analytics Program
Transforming your business into a “data-driven” culture can provide many benefits and opportunities; taking on such a culture shift is rarely without challenge. It is important for organizations to understand some of the hurdles that implementing such transformations may present.
For instance, integrating a robust data analytics program may result in:
- Culture shock and resistance to change within an organization
- Lack of understanding of the “big picture”
- Data overload and data integration (i.e., the combination of various streams of data) can be problematic because data comes from various places, making it a challenge to produce reports that provide decision-makers with invaluable information
- An inability to consistently use the data to drive the decision-making process
- Data security issues
- Increased costs and time to implement and continuously adjust to technological changes (i.e., the need to recruit new employees and train existing employees to ensure accurate and beneficial data analysis)
Companies are faced with different obstacles in developing a strategy that best fits their culture and overall company goals. However, given the stakes involved, and the potential benefits data analytics can produce, it is highly recommended that businesses begin to take the steps necessary to access data and harness the power that data analysis can generate.
To learn more about how data can help enhance business operations and productivity, contact your Berdon Relationship Partner.