Does “big data” scare you?

Over the past couple of years there has been much discussion regarding “big data” and “data analytics”, especially making it sound like analyzing information is a novel idea.

Part of it is, part isn’t.  Progressive companies have analyzed information for many years, seeking insights to guide decisions. These companies either had the tools to enable them to do this or had people who had the vision and the talent to “refine” data.

The part that is new is that more companies are gathering disparate data to see where there are correlations and/or as ways to append data to records to given them new insights into their business and their company.

Ric Anderson, managing partner at The Retail ThinkTank, recently wrote an article titled “Put ‘Big Data’ to Work“.  The article is retail-oriented but, consider these words:

• “I rarely find that it has been used to its full extent for the simple lack of manpower, time, or training to understand its learnings. It is only useful if one understands the questions to ask and how to effectively put the learnings from those answers to use.
• one of the most effective and practical tools, yet rarely used to its full extent, is the in-depth use of a “Market Basket Analysis”. This is an investigation into a Customer’s transaction with the retailer
• Going forward you have a better vision for new products, physical placement of products in the store or online, where expansion needs to take place, when to market those products, and which products to place next to others to increase the likelihood of an additional purchase.”

As a manufacturer or distributor there are a multitude of opportunities to utilize business analytics (or business intelligence) tools. And this is more that downloading information into Excel.  Consider:

• The opportunity to do customer and salesperson (and even geographic) gap analyses to identify training needs?
• How could greater insights into customer mix, order type, order frequency and average order size drive a pricing strategy?
• What is the impact of geography on corporate margins?
• What should marketing be promoting based upon sales activity by customer type?
• Have promotional initiatives impacted product velocity for complementary products when the primary product is promoted?
• What lifecycle marketing opportunities are there?
• What is the correlation between customer online viewing (or maybe purchasing) with margins or actual purchasing of the item?
• What products should be displayed where at the counter (or in a merchandising relayout)?
• What information could help purchasing in product specific price negotiation? Do you know you’re selling x with y or are you losing y because you’re not price competitive?
• As a manufacturer, are your RMs or reps armed with order information that shows sales by SKU and their complementary products and then map the information vs sales in the territory to see if you have territory wide mix and share?
• Are you reviewing margin dispersion charts for the company, region, branch, salesperson, account, SKUs on a periodic basis to determine why a customer buys at x number of different prices (excluding projects)?

The point is that there are a myriad of questions that could be asked to help you analyze your business to improve profitability and increase sales … and none of the above issues relate to the operational side of the business (it would be another long list).

The key, however, is:

• For the thought process to become second nature for your management team.
• For the tools to be released by IT so that it can be used by analysts
• Analysts need an understanding of the business and the various inter-dependencies so they can conceive the question to conduct an initial search and then know enough to either ask questions or conduct the next logical search to gain deeper insights.
• The information needs to be considered by individuals who can “read between the lines” and have a sense of the business to generate opportunities.
• Others need to evolve from relying solely based upon personal historical experience to utilizing empirical information that suggests alternatives.
• Easy to use tools. Software that “everyday people” can use with a little bit of training

Progressive companies are considering, and adding, analysts to their business. In some cases it can be a product analyst, for others it is a market analyst (or researcher), some may tie it to the executive suite.  The two places it should not be is IT or Finance.  Both can use but experience has shown that these two departments do not typically have the breadth of business experience to effectively use the tools, can be intimidating to many associates and have a tendency to “hoard” tools (sorry for the depiction but …)

And, from a timing viewpoint, if you don’t have a business intelligence tool (if you want to do this alone) or aren’t used to asking the questions, summer-time is a great time to start the process. It enables you to research tools, think of where the service needs to reside in your company and the type of questions that you need answered as you get ready for your 2016 planning this fall.

Rather than recommend tools (as we don’t want to promote resources), what tools does your company use (if any)? Are you using business analytics / data analytics / business intelligence tools? What’s been your experience? Where does the function reside in your company?

And, consider this …

• Data is good.
• Data aggregated is information.
• Information analyzed is converted into knowledge.
• Knowledge reviewed generates ideas.
• Ideas acted upon upon deliver results.