Businesses that have enjoyed the greatest success in the internet era, such as Amazon, ebay and Netflix, have something in common. They were built from the ground up as data-driven organizations. Yet many business people still look at data as a cost center, just something to be stored, rather than a valuable asset that fuels growth.
Todayâ€™s competitive business environment is driving many people to take a better look at their own data and its potential. News stories about Big Data and data-driven decision making abound. But itâ€™s one thing to know you ought to make better use of your data and another to understand where to begin.
First step: treat your data like it was cash.
Data can be as valuable an asset as cash, if you use it properly. Thereâ€™s bad news and good news about that. The bad news is that most people donâ€™t come close to making the most of their data. The good news is that their loss is your gain. Make an effort to use your data well, and youâ€™ll be rewarded with an edge over most, and perhaps all, of your competitors.
Youâ€™re probably aware that retailers like Amazon and ebay use data to understand customer behavior, make offers that are appealing and increase the number and dollar value of purchases their customer make. The competitive benefits of those uses are obvious, yet they are only a few of myriad applications for business data, each with the potential to create competitive advantage, often in ways that you may not have investigated before.
If your business didnâ€™t grow up data-driven, you can still get on track. The first step is to start treating your data like you treat your cash. Know what data you have, where it is and what state it is in. Review your data and make an objective assessment of its suitability for helping you meet your business goals. With data as with your finances, you may need to make some changes.
When you think over your money situation, you do so in light of your own goals. You focus on things that are important to you. If your goals included replacing your aging car in the near term and paying off your house before retirement, youâ€™d pay particular attention to having the money to pay for those things available when you need it. Now itâ€™s time for you to apply similar thinking to your data.
So, with your own business goals in mind, take stock of your data. Of course, youâ€™re not getting monthly statements on your data assets, so youâ€™ll have to make an effort to gather information. Youâ€™ll need to outline the data sources that you have available and whatâ€™s in them, for a start.
A dollar is a dollar is a dollar, but data is different. Youâ€™ll need to investigate whether your data assets include the kinds of information you need to address your business goals.
Analytics requires raw data, detailed information. If, for example, you want to understand buyer behavior, it will do you no good just to know the total sales of each product in a store. Youâ€™d need data with enough detail to reveal the combinations of products included in individual purchases, and preferably the identity of the purchaser.
Lack of raw data is one of the most common problems facing businesses new to analytics. Sadly, the reason so many businesses donâ€™t have the detailed data they need is that some well-meaning person discarded it, believing that those details would never be needed. Itâ€™s a habit that many people developed in the days when data storage was much more expensive than it is today. Fortunately, thatâ€™s a habit that can be overcome with a little education and some additional data storage space.
And then there is the matter of data quality. This can be tricky. Ideally, every bit of data that should be collected will be collected, and the information will be correct. In real life, such perfection does not exist. If the data source you need is far from complete, or if much of the data is not correct, you have a problem. Not only will you be unprepared for analytics, but youâ€™ll have to make an effort to understand what data quality problems you have, whatâ€™s causing them and what corrective actions you can take.
In many ways, taking stock of your data is more challenging than taking stock of your finances. You may have to work harder to get information in the first place, and then you must evaluate the relevance, level of detail and quality of the data available for your business goals. It takes effort and time to complete the process.
Then again, while you can only spend each dollar in one place, you can use data over and over. When ten projects need cash funding, everybodyâ€™s competing for the cash! When ten projects need the same data, you have the basis of a very productive working partnership, with everyone working together to address common needs. You may discover more valuable uses for that same data along the way, or even find opportunities to sell the data or some new information that you develop from it.
If taking that first step seems like a lot to take on, remember that itâ€™s OK to get help. No business would do without the help of specialists such as accountants and attorneys to deal with financial issues. Itâ€™s just as rational to involve data management and analysis experts to help you get a handle on your data assets.
Todayâ€™s the day to take that step forward. Review your own data assets and put them to work. After all, your data is like money you can spend again and again. Can you afford to ignore it?
Meta S. Brown is author of Data Mining for Dummies and creator of the Storytelling for Data Analysts and Storytelling for Tech workshops. http://www.metabrown.com.