According to IBM and other sources, over 90% of the world’s data has been created in just the last two years. At first, that sounds crazy, but if you stop to think about it, we now have sensors counting visitors to stores, POS systems that track customer information, and just about any detail you can think of around each part that is manufactured and each item that is sold.
Companies everywhere are investing heavily in IT. Some are building an analytics function as well. The rest, hopefully, will be following suit. Here are five “must haves” as you look to build your analytics function:
1) Analysts must have prior business experience and knowledge of your business
Requesting reports and data from IT is not enough. You need analytics professionals who have worked in business roles, and understand where to find issues and how to fix them. Whether you hire from within or bring in consultants, your analytics team should have at least some knowledge of the areas of the business that you want to improve. Without the ability to bridge the gap between raw data and business improvement, the team will get nowhere fast. If you prefer to build this function from within, then provide the opportunity for your employees to shadow one another and learn new business functions. If hiring external consultants, make sure they have access to and buy-in from the right business leaders in order to quickly get up to speed.
2) Technical skills must correspond to your business
The right technical tools differ from business to business. In most cases, it will suffice for the analytics team to pull the necessary data into a SQL data warehouse to analyze the data, and tools like Excel and Tableau to present findings. However, some companies, particularly those with terabytes of data, may require “big data” tools such as Hadoop and NoSQL. If you are not sure, seek opinions from a third party to make this determination.
3) Executives and upper-level management must be bought in
Any investment you make in the analytics function will be all for naught if management refuses to listen to the results. Despite the upward trend in data, many businesses still prefer to run on intuition and personal knowledge rather than listening to what the data is telling them. Both intuition and data are valuable and are best used hand-in-hand, so long as you are willing to let the data tell you when you are wrong in addition to when you are right.
4) There should be dollars tied to findings
Of course, management cannot be expected to listen to the data without good reason. The analytics function is one that should be able to pay itself off. Most, if not all, analytics projects should be tied to a dollar figure that shows management how much the bottom line will be increased should they follow the given recommendations. For example, bidding out existing freight will save X% of shipment costs or optimizing labor schedules will result in $Y million revenue uplift.
5) You should build the analytics function now
If you have not yet built an internal analytics function or brought in an external team to assess your business, chances are that cost is the main culprit. However, what many organizations do not realize is that the ROI on such projects typically far outweighs the costs. A small investment in the right resources now will pay dividends in the future to your bottom line.