Metaphors typically provide great perspective. A recent post by Eckerson Research Group referenced one that you may not soon forget, but more importantly that can help you as a business leader understand how effective your analytics investments have been the past few years:
"When was the last time you attended a meeting and had to put together a chart on the ROI for the toilet paper in your office? Most likely never, because everyone knows the value of it."
When it comes to analytics and reporting investments, even small and mid-sized company leaders should work to envision a world where the value of making those investments is uncontested — not only by the management team, but by their employees as well.
How Do You Keep Up?
The decision to supply toilet paper to an office is not about whether or not to provide it, but more about brands, costs and quantity. Similarly, the decision for business leaders should not focus on whether to invest in analytics, but on what provides the most value to the business, including which metrics matter to the business, the industry and your strategic goals; which tools to use for management reporting and in-depth analysis; and which skills you need to get value from the data and tools in the most efficient way.
It's difficult to run a growing business and make time to analyze how the business is doing, especially while the world of big data and analytics continues to explode. Below is a set of questions that can help you and your teams begin to better understand your current investment in analytics and where you could improve:
- Insights. Do your tools provide quick diagnoses into the right metrics for your business? Do those metrics support your company's strategy and individual departments’ goals?
- Planning and alignment. Is analytics a strategic focus for your business? Do people understand why? What budget should be in place for your organization to support that?
- Organization and talent. Does your team have the training and skill set to use the tools you have? Are your team’s compensation and incentives aligned to the metrics that matter?
- Enabling technology. Are you leveraging the full features of the tool(s) you already have in place? Do you need to evaluate what’s out there and implement something new so you can grow?
- Process optimization. Are employees spending too much time entering or combining data and not enough time analyzing it? Can they make data-driven decisions when needed?
- Data management. Is your company’s data clean and consistent enough to work with, or do you consistently deal with data quality issues?
While most companies have some level of reporting capabilities, most executives would say they wish they had more — more engagement around new tools, more people to analyze data, better tools, cleaner data, etc. Addressing the above areas can help provide your organization with insight into which choice of 'toilet paper' makes the most sense.
An Exercise in What, Why and How
After working through the questions above, take a moment to drill down deeper into identifying your organization’s metric-driven goals. For example:
Q. What insights do you want to get?
A. How good are our margins across our customer base? Which customers should we focus on to improve those margins? I want to see how product margins differ by business unit or entity.
Q. Why do you want those insights?
A. Expense management is a key priority for us to support margin growth this year.
Q. Which metrics will help you get there?
A. We need gross profit by products and customer versus targets. We need the drivers behind that: sales, rebates, freight and cost of goods sold to understand what’s driving differences.
Ensure the questions and answers you choose ultimately support the outcomes expected by your strategic plan this year, but be cautious of misleading indicators. Doing an exercise such as this may take time but proves valuable to many organizations who want to mature analytically or solve specific challenges. Chances are, analytics maturity — just like toilet paper — is a non-negotiable element in transforming your organization.
Please contact a member of your service team or contact Jim Boland at firstname.lastname@example.org for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.