|Data determines decisions and profits for business|
Well, gut decisions, which can still be invaluable, may not be what they once were.
More than ever, data is driving business decisions, and perhaps ironically, data shows that those businesses that are data driven are more productive and profitable.
A recent survey of executives at 330 North American Companies published in the Harvard Business Review revealed that the more companies characterized themselves as data-driven, the better they performed.
Companies in the top third of their industry in the use of data-driven decision making were 5 percent more productive and 6 percent more profitable than their competitors, according to the report.
Findings in the survey suggest that the data explosion that has occurred in recent years offers opportunities to make business decisions. For example, as more and more business activity is digitized, new sources of information and ever-cheaper equipment allows for large amounts of digital information exist on virtually any topic of interest to a business.
Sears Holdings is one such company that has transformed the way it uses data. The company found that it was taking about eight weeks to generate personalized promotions to its customers, which led to the promotions being outdated before they were generated. The data required for these large-scale analyses were voluminous and highly fragmented—housed in many databases and “data warehouses” maintained by the company’s various brands.
Seeking a solution, the company set up a Hadoop cluster, a group of inexpensive commodity servers coordinated by an emerging software framework called Hadoop.
It then conducted analyses on the cluster directly, avoiding the time-consuming complexities of pulling data from various sources and combining them so that they can be analyzed. This change created faster and more precise promotions.
Using data to enact efficiency just doesn’t help traditional corporations like retailers, but other companies serving the public.
A major airline, as an example, can employ data based decision-making. One study showed that many of an airline’s flights had at least a 10-minute gap between the estimated time of arrival and the actual arrival time. The result: crews would stand idle waiting for the arrivals, according to the HBR.
The airline was using ETAs provided by pilots. It hired PASSUR, which offered a service called RightETA. The company determined arrival estimates by combining publicly available data about weather, flight schedules, and other factors with proprietary data the company itself collected.
After switching to RightETA, the airline virtually eliminated gaps between estimated and actual arrival times, saving several million dollars year.
However, how to leverage data into a form useful for decision-making is of course the big question for businesses of all sizes, said Amit Bendov, CEO of SiSense, to Forbes magazine. Rather than scouring the globe and the depths of their pockets for the best and brightest, Bendov said Main Street businesses should be asking questions such as:
• Does everyone have access to all the data they need?
• Can the most basic user get access to the largest dataset and ask questions of it?
• How long will it take to actually get an insight?
• Does the data speak the language of our business, or do we have to translate it somehow?
The way forward might be in simplifying the tools to analyze data, so moderately skilled business people can ask the questions they really need to ask, and to understand the answers they get in return, according to Forbes.
Joshua John is the digital strategist for MBA@UNC and MPA@UNC, the University of North Carolina’s distance mba and mpa degree online. He also loves gadgets, movies, and all things links. Follow him on twitter @joshuavjohn.