Data is collected in quantities never seen before, but is this helping or hindering your business decisions?
Businesses now accumulate unprecedented sums of data from various departments such as sales and marketing, supply chain, production and finance and it’s playing a more crucial role in decision-making than ever before. No longer are decisions made purely on past experience or gut-instinct – although those two factors can still play their part. Increasingly, strategic business leaders are crunching the numbers and using data to make more informed business decisions.
How do we define data?
Data is: “information, especially facts or numbers, collected to be examined and considered and used to help decision-making, or information in an electronic form that can be stored and used by a computer.” (Cambridge Dictionary)
Why is it important and how is it used?
In business as in life, nothing is certain – apart from death and taxes, apparently. So, there is always an element of risk when making important decisions but if you can collate and analyse data to make a more informed decision you are minimising those risks, making your company less vulnerable to unwanted outcomes. Let’s look at a few examples:
- Take Amazon for example. Without data they would still most likely be just another online bookstore. Data plays a huge part in their success – basing its recommendations on customer purchase history, viewing habits, reviews of purchases and so on. By gathering this information their recommendations are far more likely to result in further purchases and increased profits. Most e-commerce sites will use data this way, but Amazon is by far the greatest success story.
- Hotels will look at historical data for average occupancy and room rates and can utilise that information to know when the best time is to offer discounted rates to boost occupancy.
- Suppliers will also utilise data to ensure their products are always available in their retail outlets. They will use reports from warehouse and POS inventory to forecast production and shipping requirements to avoid empty shelves.
- Marketing departments can exploit data to determine which advertising channel will provide the best ROI to find and then target consumers who are ready to purchase products.
- Imagine you are planning a go-to-market strategy for a SaaS company – instead of starting from scratch and hoping a new strategy works, you can examine data from previous product feature launches to see what worked, replicate it and avoid anything that didn’t.
- CFO’s have long utilised data to make strategic business decisions from an operational standpoint. They handle complex data and use what-if scenarios that drive their decision-making. More recently the CFO’s role has expanded into operational finance issues and now bridges the gap between strategic and operational decision-making with the assistance of data.
