I read an article this week that sparked a thought in my mind around why businesses are not adapting to the times and using analytics to help them make decisions. I don’t think that all decisions need to have deep analyses behind them, however companies do tend to use data when it comes to financial decisions. So, why not use data and analytics to support the cost of operating, impacts of commodity pricing over time or if you are making the right products (basically, if you are generating a profit)?
Think about Amazon. This article (link) noted 71% of retailers are using basic analytics, or none at all, to manage their business. Hmm… when you take a step back and note the distress that many retailers are facing, it all starts to make sense, right? Is the answer: let’s go figure out how to grow our online presence to compete with Amazon? If you haven’t thought it through, you’ll likely inject a lot of investment in technology and see minimal return because you haven’t determined why you are going down that path. OR, for that matter, how you will be managing the complexities that come with expanding into a different market like online.
That said, let’s get back to why analytics are quite important. Analytics start with data. If you have lots and lots of data, although sometimes overwhelming, you have a great deal of insightful information – you just may not know it yet. Through analytical methods like pattern generation, predictive modeling, data mining and visualization, etc. an organization can create insights, algorithms, and other data-driven logic to support making better decisions. Whether you are in finance, operations, supply chain, engineering, pricing… the list goes on… you can use data to understand why things are happening the way they are, what might happen next and even understand what constitutes a positive outcome early on, so that you can change directions if needed.
Companies like Amazon, Google… you get the point. The current market leaders are using data to their advantage. Are you?