Except from my upcoming book on analytics for the small business owner…
One question I get asked a lot is what should someone do when they know the data they are reporting and/or using in their analysis is not the best data available?
- Typically, Excel and PowerPoint are the primary tools used to provide management reporting to a company’s leadership. In the past few years there have been major technology innovations in business intelligence applications and data visualization software that have taken management reporting to a whole new level.
- Recruiting has seen a huge increase in number and types of reporting tools available to deliver very fast and very detailed recruitment analytics.
- This leads up to the concept of a business dashboard… which we will get to later.
No matter what part of the business you work in, the first thing to do is to define the current Key Performance Indicators (KPIs) being used in decision-making. Often right off the bat, some of the KPIs being reported aren’t even being used.
You can do a simple survey, asking end users to rank in order of importance the KPIs they get. Also ask if the ones at the bottom are even useful or should they be eliminated if no one is using them.
At the same time you should be working on understanding what computations go into each KPI. Often we just do simple counts, total and averages that mask more important data. On the flip side, we tend to over complicate things with extravagant weighing and scoring. Either way, we need to make sure we know exactly what is being reported and how does the final data point come to its end state.
The next step is to look at the data architecture to make sure there is nothing happening upstream that might impact the data we are using in the KPIs. Before making changes to the KPIs we want to have the full view of what happens before the data gets to the end user.
Now we are at the point where we can start experimenting. What happens when we swap out data points? Or if we change a variable in a calculation? Or we pull the data from a different source? The questions are endless. Pick a few, make some changes in a test environment and start sharing the updated KPI data. See if it has more value with the end users.
Again, this shouldn’t be hard. But of course in many organizations a lot of consequences can result from a simple change to just one KPI. Spreadsheets may have to be reformatted, review processes may have to be updated, and dashboards may have to be redesigned. But in the end, what is more important? Making decisions with crappy data or setting a standard to let the reporting process evolve as the business evolves?
This come back to my point earlier, changing KPIs is as much sales as it is analysis… that you have to be ready to share a story, back it up with data, and really influence the minds of senior management that updating the KPIs makes good business sense.
If you are at a point where you are trying to figure out what KPIs aren’t working anymore or you need help in building a business case to change some KPIs, let me know. I’m here to help.
Business Strategy with Analytics – Aligning a business strategy to drive an organization forward requires a robust analytics solution. Businesses who have good analytics tend to be much more profitable and efficient then ones that do not. DMAIPH has helped dozens of companies in both the U.S. and the Philippines with adding more data analysis in their business strategy. Contact DMAIPH now at firstname.lastname@example.org or connect with me directly to find out what we can do to help you align your business strategy with analytics.