Tue, Jul 8, 2008

Organizations Data Usage

The average company currently captures and analyzes internal organizational and operations data as well as external customer and vendor data in silos. This information is more often than not underutilized for reasons that include:

• Inconsistent data formats
• Limited access to data
• Lack of understanding of available data
• Lack of the skill sets needed to make the data a valuable strategic advantage
• Lack of a data analysis priority within the organization
• Lack of executive sponsorship associated with data usage
  

That’s not to say that there are not organizations working to better capture and utilize information. It’s quite the contrary. Within the silos of information that an organization has, there are typically initiatives under way to utilize data to improve profitability, return on investments, products, services, support, operations and customer service to name a few. These silos are typically represented as business units, regions, product lines, departments or other segments of the organization. However, this method of data management leaves the executive team with very little visibility into what makes their organization deliver results, good or bad. It also makes forecasting and planning for the future more of a gamble than a probability of success.

Disconnected Data

On one hand, a nimble organization provides its businesses and employees with a fair amount of autonomy in terms of decision making. On the other hand, too many disparate strategies, systems and plans can yield inconsistent results. Some of the silos may achieve exceptional results while others, delivering the same goods and services, deliver poor results.

The data for the varying results may be housed in different technology systems, spreadsheets and business intelligence tools. Because the various management teams developed their own strategies, plans and selected their own supporting technologies, the data captured generally lacks consistency and lives on different technology platforms.

Some organizations work very hard to consolidate information using data warehouses, data marts, and other methods that link the disparate information in order to provide executive level visibility and facilitate better decision making. However, if the data is inconsistent, it is difficult to make the information useful.

The further away that you move from data related to revenue generating activities and profit related costs, the less likely you are to see any consistent data capture, reporting or analysis. Human resources typically falls into this category, which is interesting when you consider that people have the biggest impact on revenues and profits for any organization.

Missing Skills

Who’s more analytical? Yahoo! or Google? You tell me. The point is, information is powerful, and these two firms know it. Amazon.com and Lehman Brothers are a couple of others that know the value of data. Sometimes information is collected by organizations because they think that it might be important or know that it is important. A few, like Google, pride themselves on using advanced analytics to predict the future of their business through captured data. People that understand databases and data manipulation are highly valued and paired with key business leaders to extrapolate future success based on past performance. Most organizations do not do this, and again, the further that you move away from the revenue and profit centers of an organization, the less likely that you are to have people that understand and use data.

People initiatives, with the exception of a few, rarely have a well thought out plan for the use of data. What should be more startling is that the data captured is rarely used for anything other than reactionary reporting for compliance or to simply high-light some basic information that shows what happened. Very little, if anything, goes into understanding why it happened, how the situation can be improved, or what the future prospects look like based on combined internal and external data elements.

The Orphan, Data

Engagement is simply a matter of keeping everyone engaged and in alignment with the organizational plan. It’s extremely effective, particularly when it’s attached to specific and measurable results.

But who’s plan is it? What are the measurable results? What were the expected outcomes?

What happens if those plans are not delivering the expected outcomes? How can you efficiently analyze what happened, why it happened and determine what could happen in the future in order to refine your plans? How can you duplicate success if you’re not sure why you were successful? Dozens of more questions related to data come to mind here.

People develop strategies and execute business plans. But as we noted above, it’s frequently done in silos that have only superficial links to the executive level strategy and often differs from the approach taken by other silos. Executives bring many skills to an organization, but they are not always analytical. Frequently executives are brought in for other skills that include being a visionary or having deep level industry experience, or having strong consumer marketing prowess or a combination of other attributes. That may explain why so many executives fail to deliver the expected results in today’s highly competitive global markets.

That’s not to say that all great leaders must be highly analytical. It just means that the executive leaders should have a vested interest in analytics that pervades the organizations planning and performance. The executive team must value data and analysis and make it a part of the organizations culture. Data makes a difference, but unless the most senior executives believe and support this concept, it won’t happen.

Delivering Business Results

We’re a long way from seeing organizations heavily engaged in organization wide data analysis. Even those that want to engage in analysis at this level will face the hurdles outlined above.

For the time being, if you are the leader of an organization, or lead one of the silos noted above, you can ensure a higher probability of business success by incorporating the following into your strategic planning and operations:

• Identify what is important in terms of data capture
• Understand why those data elements are important
• Identify what methods will be used to capture the data
• Use business intelligence software to utilize organizational data and external market data to understand what happened, why it happened, and forecast and plan future scenarios
• Hold your team accountable for data in the decision making process
• Ensure that you have the skills needed to support this level of analysis, or hire the right resources