Data to Results

Jess Wiley Distributor Management Services

The use of data, commonly referred to as analytics, as a decision-making tool has rapidly increased across every type of industry. The advancement of computers and ERP systems have provided the opportunity to collect and store this data. Many organizations use tools to mine and further sort those numbers from various systems and create a data warehouse. From there, we must determine the best use of this data. The book Analytics at Work: Smarter Decisions, Better Results states that by analytical we mean the use of analysis, data, and systematic reasoning to make decisions.1 The book also describes the reasoning behind this use of information: If we want to make better decisions and take the right actions, we have to use analytics. Putting analytics to work is about improving performance in key business domains using data and analysis. For too long, managers have relied on their intuition or their golden gut to make decisions. For too long, important calls have been based not on data, but on the experience and unaided judgment of the decision maker. . . . Sometimes intuitive and experience-based decisions work out well, but often they either go astray or end in disaster . . . In other cases, non-analytical decisions dont lead to tragedy, but they do leave money on the table: businesses price products and services based on their hunches about what the market will bear, not on actual data detailing what consumers have been willing to pay under similar circumstances in the past. . . .1 The above referenced book discussed many different types of customers such as Best Buy, Harrahs Entertainment, Capital One, and Progressive Insurance. However, there has been a great deal of research done regarding industrial distributors just like you. Distributors need to do more with the data they currently have. They have got to transform data into better information and as a by-product, value. Better information does not mean more information, however. The goal of information is not to bog down decision makers with a stack of reports to try to figure out why something occurred, but rather to allow them to easily and precisely identify opportunities and block threats before they occur. . . . The better that information becomes, the better tuned the decision maker becomes to his or her business surroundings. As information is better managed, the easier it becomes to manage with less of it. Strange, isnt it? What this means is that once you become adept at managing data (transforming them into information and reports and becoming an analytical distributor), they no longer are a burden. 2 Many organizations are seeking to become more analytical and use the appropriate types of information to make better decisions. There are several necessary steps in this process of

implementing an analytical capability throughout any organization. The graphic below is an adaption from the referenced authors decision tree to help organizations determine where they are in the process.

High-Quality Transaction Data

Support of Senior Executives

Application throughout the Organization

Analyitcal Skills and Culture in Place

Integrate Analytical Capabilities into the Business

The process begins with having the necessary data that can be utilized for multiple purposes, and new IT capabilities have allowed us to capture a lot of data from many different aspects of business. A company in the information age has unprecedented access to transaction data, but all too rarely is that data sifted into the sort of knowledge that can inform business decisions and create positive results.3 This collection of data is the first step towards creating knowledge that can improve the results in your business. However, its not enough just to have the numbers. The second stage in the process is one that is dependent upon management styles and the success an individual has had utilizing business intuition. Some organizations have the support of senior executives and the leadership team drives the effort towards using information on a daily basis. They understand the importance of running the business, not just on gut, but by using powerful information to make better decisions. Business intuition should never be ignored, but with the addition of fact-based decision making the company could reach new heights. Thirdly, it is necessary to have a need or application for this information throughout an organization. It could be said that some companies dont have a great need for the type of transformation that we are talking about. If there are only one or two data points that are useful in a particular business, then it is not necessary to carry out such a large initiative. However, as distributors, we have data points throughout the supply chain that are important

and that should impact decision making. Every aspect of a distributors business from vendors to customers generates data that needs to be analyzed. The next step is two-fold; first in order to make use of these mounds of data, users must possess the analytical skills to make sense of the data and information. Additionally, if the culture does not encourage its use then the organization will not be able to make this a part of routine decision-making. (Please note that analytical skills does not mean that one is a high-level mathematician, but that we know what decisions to make when presented with various analytic scenarios.) I have used the below graphic to depict this transformation demonstrating that as your ability to deliver and receive data improve so do the results that are realized. Delivery Results Knowledge

Information Data Receipt 5

Finally, once you have stepped your way through this implementation process, you can begin to fully integrate analytical capabilities into the business. This is a continuous process of educating new and existing members of the company, as well as producing valuable analytics. At that point your organization can become an analytical one that successfully combines experience and insight with the knowledge that really good information can provide. References 1. 2. 3. Davenport, Thomas, Jeanne G. Harris, and Robert Morison Analytics at Work: Smarter Decisions, Better Results, Harvard Business School Publishing 2010 Pericle, Tony Transforming Data into Action: Using Analytics for Better Distributor Sales Decisions, National Association of Wholesaler-Distributors, 2010 Davenport, Thomas, Jeanne G. Harris, David W. De Long, and Alvin L. Jacobsen Data to Knowledge to Results: Building an Analytic Capability California Management Review, 2001 Viaene, Stijn and Annabel Van den Bunder, The Secrets to Managing Business Analytics Projects, MIT Sloan Management Review, Fall 2011 Bellinger, Gene, Durval Castro, and Anthony Mills Data, Information, Knowledge and Wisdom

4. 5.

Please feel free to contact me with questions regarding your current data and how I can help you understand the information better. I can be reached at (817)692-5191 or at jwiley@3dprofitability.com.