Why Data + Analytics is a Match Made in Heaven
Webster’s Dictionary defines relationships as the state of affairs existing between those having relations or dealings. Not exactly the most romantic description when one thinks of relationships in the traditional sense. But as the definition states, relationships are about mutual interactions. Whether it’s personal or professional, it’s important to establish trust and keep an open dialogue to maintain a healthy relationship. In business, relationships are the longest-standing, most proprietary differentiator for any company. So what’s the secret to maintaining and growing business relationships? Data and analytics, naturally.
Among the entities you do business with lay potentially crucial insights and information that can be critical in assessing total risk and opportunity. While not obvious at first glance, these insights become visible when you dive down to explore the information that links these entitles to you, as well as their connections to other businesses. The more you expose entities across your silos, the greater your visibility into the cross-company interactions with customers and suppliers. Your ability to uncover previously hidden associations inside the data provides a catalyst for business transformation and insights. Exposing relationships across product lines, branches and countries creates new opportunities to advance business goals.
Today’s most successful organizations are starting to recognize the importance of data that provides meaning or context for a deeper understanding about the companies they do business with. Whether it’s their customers, partners or suppliers, by closely analyzing this data, you can begin to infer the nature of relationships moving forward. What potential behaviors and actions might an entity engage in? What are its current challenges, opportunities or other situations that we may or may not have yet to consider? Using this wealth of data, you can begin to answer these very important questions.
“Relationships are important because they are always evolving,” says Dun & Bradstreet’s Chief Analytics Officer, Nipa Basu. “From mergers and acquisitions to divestitures, companies are continually growing or downsizing, and that can spark a chain reaction that can impact all the companies’ business dealings, ultimately effecting your bottom line. Observing changes in relationships is often overlooked but critical to your success.” Basu explains.
It is important to remember that business relationships can be one-to-one, one-to-many or many-to-many. They can be unidirectional or bidirectional in nature. “Understanding the differences can be key to the types of questions you ask and what insights you draw from the data,” says Basu.
For example, most companies really don’t need complex analytics to understand their direct supplier; they typically interact often enough and understand what’s happening on the surface, but they may not have any knowledge of what’s happening with their partner’s partner, or suppliers’ supplier, and so forth. These relationships, while not direct, can have a major impact on business.
Let's look at the supply chain, a perfect example of a network of interconnected companies that embodies the delineation of a business relationship. One misstep by a supplier all the way down the chain, commonly known as your Tier-N supplier, can have a domino effect throughout that network of associated companies. “We see this all the time,” says Nipa. “A major manufacturer works with a supplier that works with another supplier for a crucial part, and every so often, there is a recall. The manufacturer is often caught off guard and has to account for the setback, which in turn can have a downstream impact to other suppliers in their network not to mention its customers.”
But what if the manufacturer was able to anticipate this issue and the effect on its business, Basu wonders. “Through a combination of interpreting the right signal data and implementing advanced analytics uncovered in this data, unmet needs arise, hidden dangers surface and new opportunities can be identified.” Basu says it’s vital for companies to look at a variety of data points to understand their relationships. “It’s about being able to interpret the signals from additional data within these entities (such as trade data, shipping data, public legal documents, etc.), that creates meaningful insights on the inter-company business dealings that can help drive your business strategies and keep you above water in a sea of fierce competition.”
Basu adds that recognizing the value of relationships is not limited to a company’s suppliers or partners, but that it applies to the relationships of different business units across the enterprise. “It’s quite logical to have different areas of focus,” says Basu. “This can, however lead to a narrow lens about the market and about how the company should be run. If all lines of business are making data driven-decisions from an enterprise level prospective, and those decisions are made by applying analytics, then it's a lot easier for them to come to the table, at least with the same understanding of the corporate-wide facts.
“Every day we work with Fortune 500 clients that are amazed by the opportunities that are presented when we’re able to provide a single, complete view of the customer relationships that exist across departments,” says Basu. While each department may be running analytics, it’s often in silos, an all too common challenge for most organizations. “That’s why it’s important to break down the barriers with an enterprise-wide analytics strategy to broadly identify relationships that help your functional areas collectively grow wallet share,” explains Basu.
Ultimately, these “relationship” data points enable you to move beyond simple modeling based on internal historical data and produce sophisticated business models grounded in multifaceted business connections. It’s the secret to ensuring a harmonious relationship according to Basu.