With More Data Available than Ever Before, How do Businesses Identify What they Need to Know, and Use it Effectively?
Data is integral to the operations of any business, and developments in data and technology are enabling companies to seek out new sources of competitive advantage and make intelligent decisions about where to invest resources. Data and analytics are being used to assess risks and identify opportunities for growth and are becoming a valuable ‘asset’ to many organisations.
In the current business environment it’s impossible to operate without data and the Economist represents it as the ‘the new oil’ that will drive future growth. But organisations need the right kind of data to fuel their business: data needs to be accurate, up-to-date and relevant. To unlock the full value of data, businesses need to extract meaningful insights that support their objectives, in the same way oil is refined for specific purposes.
Data is Everywhere
The amount of information available is growing at an immeasurable rate and a recent report (‘Data Never Sleeps’) estimates that by 2020 for every person on earth 1.7MB of data will be created every second. This explosion of data is driven by a number of factors, including the internet and the introduction of smart phones and social media. Companies are leveraging data in different ways, such as using digital data to identify what influences buying behaviour and using this to inform their sales and marketing strategies.
Limitless sources of information are transforming the way data is used by businesses, but greater access brings with it increased responsibility. News stories about the Cambridge Analytica scandal have raised ethical questions around how organisations capture and use personal information, and this has been further intensified by the introduction of the new General Data Protection Regulation for EU member states.
With so much information out there, it’s often hard for businesses to know what data to use and importantly, what to trust. Starting by defining the problem that needs solving, or the insight or outcome sought is often better than starting with the data itself. Gartner predicts by 2020, 50% more people will be consuming more fake information than true, which increases this challenge even further. Third party data providers can play a key role in validating and verifying data to help businesses extract the most value.
With the data landscape changing at such a fast pace and more focus on regulation, businesses need to look at data in different ways to support future success. New technologies and techniques such as machine learning can be used to approach problems in new ways, uncover previously untapped opportunities, and obtain a better understanding of business relationships.
Protecting Your Business and Identifying Opportunities
Businesses can help to protect their reputation and minimise risk by ensuring they have accurate information on their customers, partners and suppliers. Knowing who you are doing business with and buying from can be crucial to avoiding financial penalties and negative media attention. For example, beneficial ownership data can provide a better understanding of business relationships and identify potential risk in the supply chain, and credit information can help to identify the right companies to work with by predicting whether they are going to pay on time.
Data can also be an invaluable asset to help identify and capitalise on revenue and growth opportunities. Obtaining quality data on prospects can support sales and marketing activities, and intelligence on customer needs and preferences can direct product development strategy. McKinsey quote research that suggests companies who leverage customer insights outperform their peers by 85% in sales growth and over 25% in gross margin.
What the Future Holds
The velocity and volume of data is not showing signs of slowing, with more ‘open data’ widely available. There are new types of data– such as cryptocurrency and sentiment data, including social media ‘likes’ - that will continue to shift the landscape, provide new opportunities and increase the debate around responsible usage. The growth of technologies such as artificial intelligence and machine-learning techniques are also changing the way data is analysed, driving automation and increasing speed and efficiency. Emerging technology is undoubtedly transforming the way we interact with data and will continue to do so.
Being able to obtain data is one thing, but managing it effectively is also essential to driving profitable growth. Businesses who have a centralised, consistent data strategy will be able to harness the full value of data. Those who embrace the value of data and use it responsibly to support their objectives and decision-making will be more likely to secure future growth.
This article was originally published in Business Reporter