Economist and data analyst, David Maher, director of Melbourne-based company Right Brain Insights, shares his thoughts on how cloud software is a valuable tool for companies to understand and use critical business data. This article is the first in a 5-part series.
Let’s face it – data is changing our world. This trend represents a real and present danger to those businesses unwilling to change course, and a HUGE opportunity for those willing to embrace it.
Unfortunately, too many companies do not comprehend the power that comes from understanding their business data. Without investing in acquiring accurate business data you miss the opportunity to put the pieces of your puzzle together. You will continue to rely on gut feel and (at best) vague assumptions about past performance to inform your decisions - ultimately compromising your long-term results. In short – there has never been a better, or more important, time to invest in data to manage your business proactively, rather than the reactive nature that so many businesses are operated on.
Data is to the digital economy, what oil was to the industrial
The beauty is, if you are in the cloud, using systems such as Xero and WorkflowMax, you are already sitting on a huge reserve of data.
These cloud systems offer you invaluable insight into your sales, expenses, profit, staff efficiency, job losses and gains that can help you answer critical questions and drive smart business decisions - you just need to tap and refine it.
Every business is different, but how can an SME practically become data-driven?
Organise, correct and clean your data now. Similar to weeding a garden, you don’t want to wait until your data-related-problems are 6ft tall and covered in thorns.
Start by asking yourself 3 simple questions:
- What are your goals?
- What are your budgets?
- What are you trying to achieve?
Data is only powerful when put in the context of these questions. Figure out what you’re trying to do before anything else.
Conduct a Data Audit
The easiest way to sink your company is to slam into an iceberg. The only way your data can help you navigate around such challenges is if it is up to scratch - that is, accurate and organised appropriately. Start digging into your data and see what state it is really in.
- Are your financials up to date?
- How many unreconciled transactions are in your Xero account?
- Does the thought of being audited by the taxman make you want to research extradition laws, or do you sleep soundly?
- Do your staff correctly execute your processes and utilise your systems, or are things done on the fly?
The worst thing you can do is to attempt to create an insight off data that is incorrect to begin with.
Focus on Quality, Not Quantity
Understand what is a ‘must have’ and what is a ‘nice to have’. Focus on the ‘must haves’ and try to get them 100% before you start worrying about everything else. The secret is to pinpoint the data that, when mixed with a solid assumption or two, has the power to unlock other areas of your business.
- What are the one or two numbers that, if you could understand, would help you run so much of your business?
- What keeps you up at night? How could you inform this?
- How could you form a view of your past, present, and your future?
- What is truly important to measure? What is just noise?
Remember, data for data’s sake is useless. It’s just noise. Focus on what truly matters. When it comes to data, less can indeed be more.
So you’ve got data - now what? Discover how to make it meaningful to your business in David’s next post in his 5-part series on the WorkflowMax blog - sign up for updates below so you don’t miss it!