Most businesses generate and gather vast amounts of data along the value chain, but value doesn’t come from simply the volume of data at your disposal. Value comes from your ability to collate and make sense of that data, then turn that insight into action that aligns with the business strategy.
Data can become your competitive advantage, with data-driven businesses in a better position to understand both their supply chain and their customers.
On the back-end, data-driven insight can underpin initiatives such as predictive maintenance, supply chain optimisation, inventory management, demand forecasting and fraud prevention.
On the front-end, this insight can inform adaptive pricing, churn reduction, cross-selling and upselling, and personalised promotions. An online retailer’s ability to boost sales by suggesting related products during checkout, based on customer behaviour, offers a great example of unleashing the power of data.
Data also offers the ability for businesses to better understand customer lifetime value. Learning to recognise and understand your more lucrative customers can influence your sales and marketing strategies, to ensure you’re attracting and retaining the right customers. Understanding their lifetime value allows you to justify spending more to acquire them, giving you an advantage over competitors who calculate their customer acquisition spend based on one-off transactions.
Data-driven insight is not limited to identifying opportunities to optimise operations and increase profits; it also allows you to identify market trends and recognise new opportunities to drive growth. Rather than be at the mercy of data-driven digital disruptors entering your market, it presents the opportunity for your business to become the digital disruptor.
Getting the most from your business data requires understanding what management consultancy McKinsey calls the ‘insights value chain’. This begins with excellence in identifying, capturing and storing data, moves through the technical capability to analyse and visualise data, and ends with a business that is able to complement analytics with the domain knowledge of human talent and rely on a cross-functional, agile structure to implement relevant insights.
Customised Collection
There’s no one-size-fits-all approach to collecting business data, but one of the keys is to ensure that this data isn’t locked away in silos where it is difficult to access, work with and integrate with other data.
This is where your data strategy can intersect with your cloud strategy, as relocating data from disparate systems and on-prem hardware into the cloud is often part of the solution. This must obviously be done with an appreciation of relevant regulatory requirements, data jurisdiction concerns and privacy laws.
One approach is to create a ‘data lake’ – a centralised repository that allows the business to store all of its structured and unstructured data at any scale. Your data can reside in a data lake in its native format, with advanced analytics tools able to make sense of this raw data and extract insight.
Don’t forget, a data lake is still only a means to an end. Don’t spend years organising and cleansing your data before you see any benefits. You need a strong use case from the beginning, which delivers actionable insights and unlocks value each step of the way to help the business achieve its goals.