Award-winning author and business analytics expert, Bob Mathews, shares insights on some key principles you must know before embarking on a business analytics initiative.
We are in the infancy of business analytics, aka Business Intelligence 2.0. Organizations that master it will have a huge advantage over those that don’t, including the ability to create a significant competitive advantage. These same organizations will also have a huge generational advantage as well because the first generation of business analytics is going to be a passing fad for most companies.
The following are 9 pillars of business analytics success which you need to know before embarking on your journey:
1. Identify the Business Need
Business Analytics requires businesses to strategically map their performance drivers and identify critical areas where data-driven decision-making can produce meaningful results. In doing so they identify the business issues or opportunities they want an analytic solution to address – this process is depicted in Figure 1 below:
2. Get Executive Buy-in!
Unlike Business Intelligence 1.0, where the business intelligence team could operate in a silo, ensuring its own success regardless of what happened to other functions within the organization; business analytics takes an organization-wide approach. For this reason, you will need to get executive buy-in so that the entire organization is singing from the same songbook.
3. Define Your Roadmap
The Stages of a Typical Business Analytics Initiative
By following these 3 steps your business will be well on track for creating or improving upon its existing competitive advantage! This means learning how data can bring improved decision-making and improved results through better decisions!
4. Get the Right Team in Place!
Everyone is going to have a different opinion on who should be involved, but 3 roles are critical. These include A Business Analyst or Subject Matter Expert (SME), skilled at asking the right questions; A Data Scientist, skilled at finding the data (often by combining it) and interpreting it; And an IT/Technology Evangelist, meaning someone who can bridge the gap between business and technology. Many organizations begin with one person fulfilling all three positions, then build out each role as they become more sophisticated in their approach. For example, you might start with only 1 functional analyst (the SME) before adding another when you hit scale.
5. Get Organized!
As with any project, you’ll need to get organized! There are several methods for doing this. If you’re using Tableau (which is very common), you can use Dashboards to share your results with different groups within your organization.
But the most important thing is that everyone involved in the process is on the same page and understands their role in achieving success.
6. Get Ready to Roll Up Your Sleeves!
Here’s another key principle: Business Analytics isn’t just about technology; it’s about people “working together” on business problems, requiring new kinds of metrics and analysis that often require more than just automated data discovery tools like Tableau or Qlikview. It also requires creating custom reports, dashboards, and other data visualization solutions, which can be time-consuming.
7. Measure the Right Things!
You’ll want to develop “Critical Metrics” for your organization – these are simply a small set of metrics that enable you to manage your business – they will vary from industry to industry and company to company. But no matter what industry, they should include some key performance indicators (KPIs) such as Revenue per Full-Time Equivalent (FTE), Operating Profit Margin, Free Cash Flow, etc. For more information on this subject please see my article here.
8. Understand What Drives Revenues and Profits!
The best way is through Tableau’s Guide to Understanding Drivers
A driver is “a thing that makes something else happen”, representing relationships between key metrics in your organization. A good example of this is the relationship between an airline’s available seat miles (ASM) and its revenue passenger miles (RPM), which are inversely related—as one goes up, the other goes down. This relationship drives home the point that when airlines sell more seats, they may not be covering their costs because there is less capacity.
9. Get Data!
There are many sources of data today, including internal databases; SaaS applications; publicly traded companies’ financial filings; call center reports; trade associations; government agencies; customer surveys, and media posts by employees or customers on social media.
Conclusion
Following these 9 steps will put you on the right path to get started down the road of Business Analytics! There are many more things to consider, but starting small and getting everyone involved is a key. No one person should be responsible for taking on business analytics alone, so if you’re already in this position please pass it off to someone else in your organization who can take ownership.
Masab Farooque is a Tech Geek, Writer, and Founder at The Panther Tech. He is also a lead game developer at 10StaticStudios.
When he is not writing, he is mostly playing video games