The amount of data that organisations generate every day has surged in recent times. Data comes in many shapes and forms – from financial and operational data to emails and tweets – and is a major asset to organisations. But it is often difficult to exploit data to gain insights that will help achieve growth and identify underlying risks.
Tesco plc was one of the first major organisations to recognise the value of data by studying customer spending patterns through its Clubcard loyalty scheme and using the data to send out specific promotional material to individual customers, tailored to their spending patterns.
As well as identifying opportunities to improve business performance, data analytics can also highlight risks before they materialise in a detrimental way. Many accounting scandals could have been spotted in advance if the right data analytics had been in place to spot red flags from within the data. External auditors of large organisations now use data analytics to trawl through millions of journal entries looking for red-flag characteristics appearing in the data.
Creating a data analytics strategy
To be successful you need a clear data analytics strategy that addresses the areas of people, technology and process. The most important element is people. There needs to be a drive and appetite among data analytics specialists, and management needs to support and encourage the use of data analytics. Only by doing this can you be sure it supports your business in key areas such as: marketing, finance, compliance, and audit and risk.
Defining a process
You need a clear process that gives you access to your key data sets. This data may come from your actual systems or data warehouses. By collaborating with your IT team, access to data can be seamless while not putting your systems at risk by placing too much demand on them or allowing too much access.
You will find a range of technology on the market that will help you analyse your data. These tools can be as simple as Excel through to advanced analytics platforms that perform predictive analytics using historical events to pre-empt future events. Most of these tools enable you to develop insights from data provided that you ensure the right people with the right skills develop the analytics.
Recently the trend has been towards data visualisation tools that take data and portray it as dashboards, storyboards, infographics and charts. Illustrating data on geographical maps is also a popular way of gaining at-a-glance insights from data. Data visualisation tools are popular because people who are short of time find it easier and quicker to understand the results as a visual representation. A picture really is worth a thousand words.
Ownership of the data
You need to address who is responsible for developing and maintaining your data and analytics. Large organisations that recognise the value of data appoint Chief Data Officers (CDOs) who have total responsibility for overseeing and governing an organisation’s data.
Andrew Day, the CDO at Sainsbury’s in the UK says: “My role is to help the business make better decisions based on information and analytics. I’m responsible for leading a team of data engineers, scientists, analysts and reporting types, and I work out where to apply their skills to create positive outcomes for the business. I also provide an indirect leadership role for data and analytics across the Sainsbury’s group, to ensure that we’re providing learning and development opportunities for people, and sharing best practice.”
While appointing a CDO may be a step towards ensuring that you make the most of your data, it may not be a viable option for smaller businesses. Instead, responsibility for these activities may fall to an IT function. Other business functions may also have to play the role of CDO, seeking direction from your IT function or external consultant.
Data analytics has been around for a long time but many organisations often struggle to benefit because of a lack of direction and skills. To gain a competitive edge over your rivals, and remain on the right side of legislation, you need to work out the right strategy that will create positive outcomes for your business.