The need for SMEs to use data to add value to their business
By: Steve Bailey
Tags: Analytics, Small Business, Data, Insights, Sme

Applications of Data: A Brief History

Data’s prominence as a key value driver for business has been reported on time and time again in recent years. Data is not a contemporary business transformation that defines the 21st century business landscape. There is a proud history of data supporting humanity long before the turn of the current century. In fact, one of the first use of analytics by a business can be found towards the end of the 19th century when working in the U.S steel industry Frederick Winslow Taylor initiated time management exercises and would later publish ‘The Principles of Scientific Management’ in 1911. Operations research was conducted on large amounts of data for use in the battles in the North Atlantic during World War Two. In the 1980s Gartner began to offer multiple information services for their clients which focused research on different high-tech industry segments providing detailed analysis. These three examples are just a highlight of the incredible outputs that can be achieved through data analysis, taking man to the moon to mention another great example.

A major development of the 21st century has been the rapid expansion of the amount of data that is being generated, 2013 4.4 Zetabytes, 2020 44 Zetabytes (World Economic Forum). With the glut of data available businesses do need to be careful not to take a ‘quantity over quality’ view when it comes to using the data that is generated within the company or externally available. The enterprises that leverages their data to better understand their customers and to improve their decision making are clearly outperforming everyone else (Bernard Marr). Those businesses that are executing effectively on a data strategy that aligns to the company’s goals and strategies are realising a new source of competitive advantage.

Of course, the abundance of data is meaningless if it is not used in any reporting outputs and where a business does have reporting outputs for its data, those reports can be a wide variety from printed tabular data on ageing software to best practice full stack data solutions embedded in an analytics centre of excellence.

How Data Mature Businesses are using their Data to Add Value to their Proposition

With the proliferation of BI tools and SaaS (software as a service) coupled with the ever-increasing pressures on maintaining margin. Large businesses are increasingly turning to data to provide insight that will help them on the path to growth or highlight areas of the organisation where there is the opportunity to reduce costs. The insights generated from the data are used to assist business leaders and key decision makers in making informed business decisions to drive greater profitability.

A good example of businesses investing resources in creating a data strategy that aligns with the business strategy are with manufacturers who have brought about cost savings through predictive maintenance. Through data and analytics the manufacturer can now predict when the right conditions are met for their asset to have the appropriate maintenance, thus extending the ‘run-time’ of the assets with there being considerably less down time due to unplanned/emergency maintenance. The global aircraft manufacturer Airbus is a good example of where insights have been generated using predictive maintenance software to assist their customers (airlines) in maintaining higher levels of fleet availability in turn reducing costs.

SMEs Must Manage their Data to Draw Insight and Improve their Business

According to a recent report by the FSN Modern Finance Forum ‘The Future of Analytics in Finance Function Global Survey 2020’ only 14% of the senior finance professionals surveyed state that their analytic efforts are ‘insightful’. The report also suggests that there is an increased likelihood that the companies with thousands of employees are more likely to be producing the insightful analytics in comparison with smaller companies with less than 500 employees. Those smaller companies are primarily delivering cyclical reports with limited ad-hoc analysis.

Too often those cyclical reports that are driving the reporting outputs of SMEs (small & medium enterprises) are driven from Excel or the tools / extensions of an ERP / CRM. Excel is a great business tool and has delivered for companies for decades. However, it is becoming common place within large organisations for visual Dashboards to be the most effective way to understand what is happening within the business. Excel’s use for analytics and insight should be limited within the era of advancing technological solutions. It is time for SMEs to embrace the new technologies that are being utilised by the corporations and big business and let the solutions assist in the efforts to drive value from analytics.

A recent Sage report found that 71% of SMEs surveyed believe that technology will assist their business in becoming more profitable. An investment in a solution to overcome SMEs reporting issues and lack of insight for smarter informed decisions is becoming increasingly viable for the largest cohort of businesses. Just as the large businesses have turned to BI applications to assist the business in providing insights, the SMEs can also leverage this technology and can begin their analytic journey free of charge by taking advantage of some of the free trials that are offered by vendors in the BI market like Microsoft’s Power BI. Even outside of free trials some analytic tools are keenly priced and used correctly by the business can generate a quick return on investment through the insights captured and actioned upon.

SMEs who have many transactions (operational, commercial, financial etc) or have large value transactions with clients should be looking at BI applications to apply the relevant transactions to the organisations data, generate informative dashboards and enable decision makers to have a more dynamic and enlightening experience when interacting with data. Where the business lacks the resources (expertise, headcount & time) they should give some serious consideration into outsourcing the BI developments to an expert who can swiftly provide the outputs that will lead to greater profitability.

What are your thoughts on how SMEs can unlock greater value from their data?