You hear more and more these days about the importance to the small to midsize business of analyzing data in the decision making process. From USA Today to the Harvard Business Review, from bloggers to established experts (and most in between), the term “Big Data” is showing up more and more. A recent article by Abe Eshkenazi of APICS, The Association for Operations Management, takes a look at what all the fuss is about.
Big data, or data mining, is by APICS’ definition an “innovative technology that accesses, integrates and reports all available data.” As the HBR notes in a recent article, “the big data movement, like analytics before it, seeks to glean intelligence from data and translate that into business advantage. However, there are three key differences – volume, velocity and variety.”
As noted in the APICS article… “As the tools and philosophies of big data spread, they will change long-standing ideas about the value of experience, the nature of expertise, and the practice of management,” write Andrew McAfee and Erik Brynjolfsson in HBR. “Smart leaders across industries will see using big data for what it is: a management revolution.”
As it turns out, the HBR authors discovered that companies were “all over the map” when it came to using their data to make better business decisions. However, the companies that identified themselves as data-driven had better financial and operational ratings.
In their recommendations, the HBR article authors note that leaders need to take two key steps if they want to effectively use ‘big data’: First, they need to start asking… “What do the data say?” when there is an important decision to be made. Then, they need to follow up that question by examining where the data came from, what types of analyses were used, and what the level of certainty is surrounding the data.
The other thing the authors concluded was that true leaders in this so-called “revolution” need to be willing to be overruled by what the data show.
As the authors noted, “Few things are more powerful for changing a decision-making culture than seeing a senior executive concede when data have disproved a hunch.”
An APICS survey found some of the challenges of actually using big data. Companies are often overwhelmed with data, even as they struggle to get their hands on the right data – that is, the data details essential to so many decisions and plans. Moreover, they have difficulties in getting the data to practitioners in efficient time frames. Finally, the data are not always easily accessible. The data may be on paper, in files, as opposed to ‘living’ inside the company’s financial or ERP systems. Or there may be security restrictions or support difficulties.
All these obstacles hamper the ability to efficiently get at sales figures, demand forecasts, scheduling assumptions, current BOM revisions, customer change orders and shipment statuses, to name a few.
The challenges are not insignificant. The solutions lie in modern software, reporting tools, and appropriate procedures. If only companies will take the time to think about them, and devise strategies to actually comb their data and create their own, better, information systems.