Business intelligence (BI) and analytics tools are behind the rapid adoption of data-driven decision making (DDDM) by today’s business leaders. It’s a game changer for companies, making it possible reduce human error in everything from high-level choices to even the most granular decisions. Furthermore, it facilitates the use of fact-based insights when creating key performance indicators (KPIs) and evaluating potential goal metrics in every area of business.
That said, to grasp the wider impact of DDDM, it’s important to understand just what it means in a business context, and how to put this into practice.
The Importance of Data-Driven Decision Making in Business
In the most basic sense, data-driven decision making describes the practice of basing professional objectives and actions on business analytics. This contrasts traditional decision-making methodologies, which rely on experience, intuition and judgement to choose the best course of action.
DDDM harnesses vast volumes of both internal and external data. Companies then use this information to find hidden patterns, behaviors, opportunities or practices. Although data may frequently determine what’s working best — such as a particular workflow, strategy or behavior — it also identifies pain points that need to be addressed.
Either way, business intelligence and analytics provide a clear roadmap forward. Such a blueprint can help every company employee — even across departments — work more cohesively. This is because they have access to the same source of ideas and strategies when working toward common goals.
Putting Data Analytics Into Practice
To illustrate the power of business intelligence and analytics, let’s take — for example — a company with two sales teams. The first team consistently outsells the second. So, what can the second team do to improve their metrics?
For starters, they’ll examine the data to gather business insights on both teams’ performances. There, they’ll be able to spot any discrepancies that explain their lagging performance. For instance, the first team might be spending longer on the phone with clients, sending more follow-up emails or simply reaching out to prospects more often.
The second team can then use this information to craft data-driven strategies that mirror the successful behaviors of their counterparts. In this way, the two teams are able to align their objectives and actions to improve their outcomes as a whole.
This objective measure of performance has the added benefit of holding every employee and team accountable for their performance. It’s not only about helping the low-performers improve. It’s also an excellent opportunity to identify and reward the company’s top talent — thereby improving morale and potentially reducing turnover too.
DDDM consistently generates better outcomes than simply trusting the wisdom of a few key individuals. However, to fully leverage all its advantages, organizations first need to get to grips with business intelligence in more detail.
What is Business Intelligence (BI)?
Business intelligence describes the processes and tools associated with collecting data, analyzing it and presenting the findings to relevant parties. Essentially, it’s the mechanism through which companies create a data-driven culture.
First off, companies need a repository in which to store their data. This requires all data to be centralized, cleansed and organized in one location. To do so, IT professionals leverage BI tools such as data quality management solutions.
Both historical datasets as well as real-time data intake are needed, so as to enable reactive as well as proactive data-driven decision making. It’s what allows businesses to spot emerging trends as well as implement effective risk mitigation strategies.
Once this is done, the process of analyzing the information can begin. This involves searching large datasets to identify patterns and relationships using business intelligence tools. Finally, the results are presented via dashboards or reports.
The Benefits of Business Intelligence (BI)
There’s a broad range of information that the business intelligence process can analyze —from external data regarding market forces to internal operational, financial, employee or customer information. Different companies will leverage this information in different ways, depending on their unique needs. Here, we’ll examine some key shared attributes that data-driven companies enjoy:
- Agility. The mark of a successful business is often its ability to adapt rapidly to changing internal or external conditions. This is especially beneficial in volatile economic situations. By providing companies with real-time information, business intelligence and analytics allow them to swiftly pivot their strategies in response to market changes or unforeseen challenges.
- Competitive advantage. The benefits of business intelligence extend to market trends, competitor performance and potential areas of opportunity. As a result, companies are able to create better strategies to optimize their performance.
- Accuracy. Perhaps the primary benefit of implementing data-driven strategies is the heightened clarity with which choices can be made. This is because decision-makers can ground their thinking in concrete information, leading to fewer mistakes and greater confidence.
- Operational optimization. Data analysis can uncover inefficiencies within an enterprise in detail. For example, a BI analysis might reveal excess inventory costs or areas where automation could boost productivity. Alternatively, companies can leverage customer data to smooth out sales funnels and boost conversions. This information helps improve employee competence, thereby reducing the stress of critical roles and improving overall business performance.
Challenges in Implementing BI and How to Overcome Them
Although the benefits of business intelligence and analytics are undeniable, that doesn’t mean there aren’t challenges associated with their implementation. In fact, as with any other major cultural and practical transition, there will likely be a few bumps in the road. Let’s look at some of them.
Sourcing Business Intelligence and Analytics Tools
The quality of a company’s tools directly impact the business intelligence process and, therefore, the quality of your solutions and decision-making outcomes. This is why it’s critical to create a cohesive and well-integrated digital ecosystem. However, the complexity and sophistication of BI tools makes this task difficult for all but the most knowledgeable software engineers.
As such, the trick is to consider each tool’s ability to integrate with existing systems, suitability for important strategic goals, security levels and user-friendliness. This will help organizations to craft a more holistic business intelligence system.
Initial Investment Costs
Many companies worry about the upfront investment costs implicit in developing a data-driven culture. Examples include expenses related to digital infrastructure upgrades and internal training.
Do remember, however, that the eventual ROI will far exceed the expense of getting the technology up and running. A case in point is the savings associated with proactive responses to problematic data trends. That’s not to mention the massive benefits that better strategic planning can bring. Moreover, efficiency gains via targeted operational improvements like automation can also be significant.
Avoiding Data Silos
Oftentimes, companies make the mistake of fragmenting and isolating their data warehouses by department. This may lead to errors in judgment resulting from a limited pool of information that fails to provide company leadership with a complete picture.
Luckily, there is a solution — embrace integration. Here, regular inter-departmental communication can facilitate seamless data flow and integration. Business intelligence and analytics tools are also capable of consolidating data sources to create a unified repository.
Overcoming Resistance to Change
One of the major obstacles associated with workflow overhauls, not to mention a different approach to decision making as a whole, is individual resistance to change. Teams, employees — and perhaps even stakeholders — might cling to the familiarity of legacy systems, resisting the need to invest in business intelligence.
Clear communication can be an effective tool in overcoming this resistance. This might entail keeping everyone up to speed regarding the benefits that change will bring — for teams, individuals and the company as a whole. Furthermore, comprehensive training and continued support for employees should help ease any concerns regarding existing skill gaps or other roadblocks.
Elevating Your Business With Data-Driven Wisdom: The Path to Informed Excellence
The transition to data-driven decision-making processes that leverage business intelligence and analytics is already well underway. Companies that take advantage of the insights that internally generated and externally accessible data can provide can also look forward to much greater control over their business outcomes. Moreover, across sectors, enterprises will improve their internal operational efficiency and develop more strategically sophisticated long-term plans, thanks to the power of combining both historical and real-time data analysis.
That said, digital infrastructure upgrades of this scale aren’t always easy to pull off —especially when the technology is new and experienced labor still scarce. This is where an external resource like Growth Acceleration Partners (GAP) might be the ideal move.
GAP’s expert software and data engineers have a track record of success, especially when it comes to setting up the digital infrastructure necessary to create a data-driven culture. Companies can partner with GAP to access the extensive skills and knowledge they possess in the area of business intelligence.
Reach out to Growth Acceleration Partners now to learn more about their bespoke business intelligence solutions.