Companies are investing massively in acquiring competitive “digital advantage”: data scientists are requested everywhere, data warehouses are growing and developing, data analytics software is offered for any kind of business operation and scale. Nevertheless, many of these efforts do not have much to show for their efforts. And it’s possible they never will. What’s the problem?
First of all, “big data” was so heavily hyped that companies are expecting it to deliver more value than it actually can. And even if the company gets some unique conclusions from data analysis, these insights may be easy to replicate. The smaller the company is, the bigger is probability that amounts of financial resources spent for deep data analytics, software acquisition will not cover the practical outputs of use of this data.
Moreover, turning insights from data analytics into competitive advantage requires changes that businesses may be incapable of making. Sometimes, companies should substantially change its business model, supply chain, infrastructure investments in order to get the advantages that are implied by conclusions from advanced analytics. For example, redesign of supply chain often is too expensive and time-consuming for retailers despite it may result in strategic advantages.
Owners of businesses should understand that there is still much work with the data the company already has. For example, SAP Business One offers “Crystal Reports” tools that contain a variety of analytical tools for the existing accounting and management data. For the majority of the cases the existing corporate data, correctly used and analyzed, may bring fast and comprehensive analytical material. And it is important, first of all to improve to manage company’s existing information.
How to develop these competences? There is enough initial data embedded in corporate ERP systems that must serve a reliable source for decision-making. Until a company learns how to use data and analytics to support its operating decisions, it will not be in a position to benefit from more advanced tools, big data etc.
ERP-systems do not only contribute substantially to an integrated vision of the business having all necessary data instantly available but also to an evidence-based decision making. Data and reports must be consistently used to guide managers’ decision making and strategic planning. This kind of culture is absolutely necessary for overall performance of the business.
The digital economy is about capturing, analyzing, and using information to serve customers. Most companies can significantly improve their business performance simply by focusing on how operating data can inform day-to-day decision making. Simple? So, why all companies are not using better ERP systems and its data management advantages? One reason may be that their management practices are very rigid to accept a necessary software innovation. Another reason – if the company widely uses ERP but does not benefit from its business intelligence tools – is that their management practices haven’t caught up with their technology platforms.
Companies that installed digital platforms – ERP systems, real-time data warehouses, and home-grown core information systems – over the past 10-15 years have not yet cashed in on the information theses platforms make available. It is quite similar with smartphone data management revolution: now everybody is an expert how to understand, find, use and transfer its data from one application to another. But just 15 years ago this all-in-one concept was fully strange and even odious to many cellphone users.
Data management sometimes requires serious cultural shift. Adopting evidence-based decision making is not easy: bigger the company – bigger is the challenge. Work processes may require redefining, data must be scrubbed, and business rules must be established to guide people in their work. But the good news is that once companies have made the cultural change, they usually do not go back, and their operating improvements are not easily replicated by competitors.
Different researches show that companies with a culture of evidence-based decision making ensure that all decision makers have performance data instantly available every day. Such companies also follow four practices:
All the above-mentioned is the key to a responsible business. How do the owners of businesses measure their responsibility towards the business? Mostly, it is intangible.
Excepting one important thing: any company must collect, use and transform accounting and management data through a single source of truth – ERP system, growing its corporate leadership culture on evidence-based decision making.