How data driven strategy decisions can save your business money
As business deliverables grow and budgets are rolled thinner, efficiency is the word of the moment. In any economic climate it's crucial that business operations are functioning as efficiently as possible and that every decision is underpinned by a business rationale.
However, as we move into a period of uncertainty – with a global recession looming on the horizon – ensuring that strategic business decisions are grounded in data becomes ever more pivotal. As a business leader there will always be factors outside of your control – that comes with the territory – but taking time to ensure that you have a good understanding of the elements you can influence will place you in the best possible position for navigating the parts you cannot.
As the old adage goes, ‘information is power,’ and the more of it that you can glean from your business processes, the better scope you'll have for achieving success and cost savings. Consider launching a new campaign or product; you wouldn’t just assume that it has gone well. You would instead look to track its real-time progress towards its intended goal via tangible KPIs. The same goes for any strategic decision. You’d want to know that the data supports your choice. So where is data most useful?
The enemy you know...
When faced with uncertainty, it can be tempting to bury your head in the sand and hope it goes away. But the reality is that it is always better to know what you are dealing with. Now is the time to reaffirm your grasp of your business’ operations and gather any insights, positive or negative, that may help you to plan ahead. Consider each element of your organisation and review the information that may help you to identify areas for improvement. With enough intelligence in your weaponry, you can be clearer on whether parts of your business may be more vulnerable to fluctuation and how you are likely to be affected by the economic climate.
For instance, if you are involved in the provision of a product or service, consider each stage of your supply chain. Pull in all relevant figures around your suppliers and outgoings and consider if there are any gaps in your understanding or areas lagging behind. Methods such as supply chain management have enormous potential for improving operational efficiencies and in turn costs.
Taking a data-driven approach allows you to better predict production and inventory changes closer to real-time, and usually involves the use of technologies. For example, Artificial Intelligence (AI) and Machine Learning (ML) models powered by supply chain data, log data and third-party sources can help improve the supply chain by identifying data patterns, then forecasting potential outcomes. What’s more, AI and ML models can create forecasts that have different confidence levels, informing supply chain leaders how likely the forecast is.
Holding a mirror up to your business
No matter the purpose of your organisation, cash remains king. And with 25 per cent of businesses failing due to cash flow, it’s more important than ever to have a solid understanding of how it contributes to your business.
For your business to continue to perform its intended function, it needs to remain profitable. But that doesn’t just mean making shedloads of money (although that won’t hurt), it's about making sure that those funds are being funnelled to the right place at the right time.
Cash flow refers to the movement of funds through your business. It can be affected by anything from tax deadlines to funding partners – in essence, anything that changes, halts, or facilitates the flow of money through your organisation. The health of your cash flow controls your every ability, including being able to offer competitive salaries and retain staff.
Where data and analytics can help is by providing strong visibility into the sources and uses of your cash, diving deep into your transactions and establishing how both ends of your supply chain are coping.
Business Intelligence (BI) and analytics software can automate cash flow analysis and provide tools to consolidate data, simplify cash flow planning, and accelerate decision making. The aim is to provide more accurate financial figures and take the guesswork out of the cash flow analysis process.
Maintaining a clear picture of your income and outputs will better enable you to make strategic decisions about your business that save money, but also to manage the unexpected. Being aware of pain points is just as important as recognising successes. For instance, if you know that a supplier is going to increase their rates in a way which will impact your Q1 budget, you may decide to delay your hiring drive until costs level out.
Data’s answer to a crystal ball
Forecasting is arguably where all of this data gains real business relevance. Forecasting is a process of estimating future events based on historical and real-time information by analysing trends. The more information that you can build into your forecasting, the more useful and accurate it will be. Knowledge such as upcoming price increases, internal staff changes and new legislation will all be crucial to informing your strategic decision making and ensuring you are not caught by surprise.
To use a price rise as an example; by combining information about the impact that an earlier increase had on a specific department in the business with real-time data such as current staffing and capacity, you can anticipate what the business implications of an upcoming rise might be.
And there are tools able to dig deeper still – predictive modelling can estimate more granular, determined outcomes using data mining and probability. Essentially enabling you to ask more ringfenced questions from specific data sets.
By choosing a desired outcome, such as the purchasing of a specific service, the model works backwards to identify traits in client data that have previously indicated they are ready to make a purchase soon. Predictive modelling runs the data and establishes which of these factors contributed to the sale – knowledge which can then be built into the decisions you make about your service offering.
Ensuring that decisions are grounded in data has always been pivotal for business profitability but as we face a period of economic downturn, it may be worth moving it higher up your priority list.
Looking to inject greater insights into your business with talented data professionals? Speak to one of our experts today.