Analytics is more than deciphering data. Using sound information guides decision making. It also reveals underlying problems that cause business havoc. Businesses have increased their investments in analytics in recent years, enabling them garner insight from the massive volume of data captured in various applications.
To extract insightful information from data, businesses need to understand their motives for analytics and have a plan on how to use the information. They need to consider five areas in their undertaking.
- Clarity on Information need
List the questions you want to address. The questions help to develop the scope of the analytics work. What a senior executive needs could be very different from a team leader for procurement. The scoping is important as it provides the business direction for the information use. Without it, you could be going in circles. It also identifies the data need. Work with the users of the information on this.
- Approach to get quality data
It is likely you need to source data from multiple applications. There could be issues with consistency, completeness, accuracy, and timeliness. Extract sample data and review them for deficiencies. Determine how best to prepare the data you need. It might be merging, cleaning, grouping, or using surrogate data. Take note of the assumptions you make as they would affect the interpretation of the information to be presented.
- Premise for action
A key purpose of analytics is to provide evidence for taking action. The data presented offer a snapshot of the past. To initiate actions, you need to establish a gauge to assess the significance of the deviation to avoid taking knee-jerk reactions. This implies the need for analyzing the pattern of performances and deviations. Sound business decisions are made with business acumen in addition to the evidence presented from past performance and predictive forecast of future trends and behaviors. Click To Tweet
- People best suited
Not every employee makes a good analyst. Some analysts are better than others. Individuals who possess the aptitude for tackling problems and the skills for digesting information are better suited to do excellent analytics work. They understand the business issues that drive the focus of the analyses. They are open to explore the messages the data present. They are quick to assimilate information from different analyses and create a cohesive picture in the proper business context. You can develop certain technical skills but you need to find the right talent for the job.
- The right tool
Despite the availability of diverse business intelligence tools, many businesses still rely on basic applications such as Excel to prepare their reports and dashboards. The basic tools consume more time and effort. A proper business intelligence tool makes the job more efficient. Nonetheless, business intelligence tools have their limitations as well. Some are better with data visualization while others are efficient with data consolidation and preparation. Evaluate your needs and assess the return on investment in your tool selection process.
Many businesses think that investing in a sophisticated tool would address the need for analytics. A tool doesn’t provide any insight when you aren’t clear on what you need and what to do with it.