Master your data (big and small): Step 1 - Does your data add value?

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Technology and data offer great insights into business; and mining information provides us with products and services we could only dream about a few years ago.

It was never so obvious to me than having to drive in a new city in one of my recent business trips. Without Google Maps, it would have been much harder. This type of application is only possible through massive collection of data, big data.

As a small and medium business, what is the first step in your journey to leverage technology and data?

Starting by collecting massive amounts of data sounds expensive and hard. Let's start with baby steps and define what data and analytics will create value add in your specific circumstances. 

IT won’t solve all your problems

When flying from Dallas to Denver to meet a prospective customer, I read an interesting article about Jim Koch, founder and brewer of Samuel Adams in Southwest Airlines’ inflight magazine (August 2014).

Jim wanted to buy a computer to keep track of business and bills. As his start-up didn't make a first sale yet, his uncle gave him sound advice by telling him that he saw a lot of businessgo broke, and they all had plenty of computers!

At that point, what Jim needed was to get in his car or on the phone and start selling. In some way, this is gathering data as well, but it translates in experience rather than numbers on a spreadsheet.

Weigh the cost vs benefits

I also had a personal experience about the added-value of data when implementing software to run a manufacturing shopfloor. The Manufacturing Manager insisted on tracking production output and costs at each step of the work order routing.

This wasn't the case before installing the new system. He thought that more granular data would provide better control and insights to manufacturing efficiency.

After trying the new process, we realized that the additional data required much more data capture, both manually and automatically, increasing administration costs significantly. In this case, the benefits didn't outweigh the negatives, therefore we reverted to back-flushing at the end of the work order.

Define what data will make a difference to business performance

Another example during my consulting days was with a jewellery retailer. Their data need was to simply start collecting customer data at the point of sale for future promotional activities.

The lessons here are that recording and using data is like everything else in a business. You need to ensure that it adds value. Therefore the first step of your big data journey is to carefully define the data and analytics that will make a difference to business performance today!

You can start with low hanging fruits. Do you have excessive stock valuation or low stock rotation? Is your customer ageing out of control? Or maybe the percentage of returns to your store could be improved.

Once your major business issue is identified, you can start the information gathering process to  reveal insights into what is happening. The first step for a growing business is often to implement an ERP and BI solution that records the financial, goods and information flows within their operations. With such a system, you should have the data to get started and solve your main inefficiencies after a proper analysis backed by data.

I hope that this blog will help you kick start your big data journey. In the next step, I will talk about the importance of data quality. Stay tuned!

 

Paul Goepfert

Paul Goepfert

Paul Goepfert is the Marketing Manager for ERP vendor Pronto Software. @PaulGoepfert

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