In this concluding post of our three part series on business analytics for the small business, we’ll look at what Aberdeen Research recommends small businesses can start doing today to begin using data to replace gut-feel in improving operational performance.
Aberdeen summed up their research as to how companies can start to become true ‘Leaders’ by providing three key takeaways or “Recommended Actions.” We reprise them here:
- Figure out what metrics (or KPIs) in your business truly matter, and measure them obsessively. Aberdeen notes that it is virtually impossible to overstate how important it is to create a sound and comprehensive set of Key Performance Indicators. As they point out, it’s a lagging indicator mindset to say we did $X,XXX in sales last quarter. Instead ask: What are the metrics that underpin revenue generation? Define those predictors and you’re on your way to creating leading, not lagging, indicators that you can use to define future goals. A solid KPI structure helps companies “better articulate and sharpen their strategy, and ultimately helps them attain those underlying goals.”
- Data is the lifeblood of your company; treat it like gold. Data, even in small companies, is growing at a phenomenal pace — estimates average 40% even in smaller businesses, year over year. And it’s coming from more directions. To manage this blizzard of data, you need a single centralized repository of data. That single repository in turn will facilitate far greater cross-organizational collaboration, communication and cooperation within the firm. It all starts with the philosophy of having everyone understand data’s importance to the company.
- Looks matter, so remember that when selecting technology. Companies with deep IT pockets have myriad options when it comes to selecting data analysis tools. In all likelihood, you don’t! So start with what you have. A talented staff member with a facility with computers or a head for numbers. A spreadsheet maven, perhaps. Most of all, look at your current business information system – be it a basic accounting system or a full blown ERP system. Is it current? If not, can it be updated? Today’s modern systems come equipped with no- or low-cost tools for ferreting out and analyzing your data. Many come with dashboards, and user-defined roles tailored to the individual’s needs, by department or function. Ask your system provider or reseller for a little guidance in this regard. Since many of the newer systems utilize newer tools for this purpose, even providers themselves are getting up to speed in the use of these data mining tools. But they are there, and they are a key factor in your ability to use the data you produce to drive your profits tomorrow. People are more likely to use tools they have and know, or that are visually engaging. So start there.
As Aberdeen concludes, “With the right tools in place, small companies will find themselves better positioned to take advantage of their analytical culture and mindset, and ultimately drive improved business performance.”