Life demands that we make many decisions all day, every day. The easiest ones to make are where we have the most information to work with, guiding us in the right direction to make informed decisions.
Our business life demands the same decision-making process. We more effectively reach our business goals with information helping us to get to an intended result.
The importance of data to business runs the gamut. From financials, and internal performance metrics, to customer data such as sales, demographics, preferences, and satisfaction scores, data is the heart of running a business. Key decision-makers need data from every corner of the business to have a complete picture of how the company is functioning and performing – this is called descriptive analytics. It is difficult to figure out where you are going if you do not know where you currently are.
Key sources of data for decision making
According to a study done by Forrester, businesses that realize the importance of data to business and rely on it to drive their decision-making are 58% more likely to beat their revenue goals than companies that do not. Companies that succeed, realize that when unexpected but significant situations arise (the coronavirus pandemic, for example) and sudden pivots are necessary, having data at hand to quickly make informed decisions works better than shooting in the dark. So what data is explicitly helping guide the hand of successful businesses, and where does it come from?
Financial: Money in versus money out. The source will be your bookkeeping tool(s) and business banking data.
Sales: How much you are selling, and where. This may come from a variety of sources, depending on your sales channels and methods.
Customers: Who is buying your product or services and related customer behavior and preferences. The depth of this data, and its source, will depend on sales channels as well as what and how you collect information from your customers.
Internal Metrics: Key performance indicators (KPIs) and other metrics will vary widely depending on your line of business. Manufacturing companies, for example, ideally monitor metrics such as order volume, output, efficiency, and quality control levels. The source of these internal metrics will depend on the quality of your internal management tools.
Informed leadership is effective leadership
Every decision-maker in your organization needs the appropriate, relevant information in order to be effective. There are many data sources for decision-making, but it can be challenging to utilize or understand the data in context without the right access or reporting. Data from different systems may not align in a cohesive manner to paint a useful picture of the business. This is a challenge that organizations should overcome in order to leverage data effectively.
Many organizations assume that data is only useful to business analysts. However, when key individuals at all levels of the business have the right data, they can better identify problems before they become critical, helping to maintain smooth and efficient operations. Additionally, looking at trend data instead of just raw numbers provides information over time and patterns that might call for change or refinement.
Keeping it clean – why data hygiene is important.
If the data you are collecting lacks consistency or validity, the ability to act upon it will be compromised. If your sources for data for decision-making don’t integrate in a useful way, you may end up with misaligned or ineffective data. The importance of data for business is both collecting it and making sure it’s accurate. This might mean either improving your current systems to output clean data. This also might mean building data clean up into your internal data analysis process.
When deciding what data to collect and how to keep data hygiene in mind.
Building your business data toolset
Your organization may already have multiple tools to operate your business, but how do you bring all of them together? Often, legacy software doesn’t integrate with tools outside of its own proprietary ecosystem. Single-purpose tools are often not built with integration in mind.
To solve these challenges, low- or no-code solutions can save the day. With custom, purpose-built tools tailored to your business’s unique needs can help create a data-driven ecosystem and better inform every decision you make.
Using a single database-driven solution can ensure clean data is collected that makes sense for your business and resolve the need to get disparate systems to play well with each other. With a platform like FileMaker, you can create a complete data engine for your business that will drive you forward. And if integration is a need for your business, it can do that, too.
The importance of data to business is paramount. Align your data sources for business decision-making by implementing effective tools that give you the end-to-end view of your business from the financials, production, sales, and vital customer information.
To learn how Codence helped a company do just that, read our case study.
Need help collecting, cleaning, or understanding your data? Contact us to see how we can help.
Danielle makes things happen, driving opportunities for Codence by facilitating cross-functional marketing, branding, and growth initiatives. She holds a Bachelor of Arts degree in Business Administration and Marketing from San Francisco State University. On her time off, she enjoys spending time with her husband, baby Ben and Bulldog Boris. (Danielle is an Independent Contractor working with Codence.)