Use of data in business - opportunity or necessity
In recent years, I have visited a number of occasions to talk about how data can be create business value. The tenacious topicality and charm of the theme is confusing, as despite its importance and potential, it feels almost self-evident. Why is it easy for us in many areas to accept the value of history, experience and their systematic analysis when considering future measures, but difficult to understand how the same concept works in business?
One of the most important factors that distinguishes a fitness athlete and a competitive athlete is purposefulness. A competitive athlete, or one who aims to be one, plans their training on the basis of a goal-oriented program. The exercises are documented and the data collected affects future exercises. The athlete knows that top results do not come about by chance but as a result of consistent, feedback-based, goal-oriented training. Without data collected from the exercises, it is not possible to personalize or optimize the exercise program to achieve a maximum exercise response.
A similar analogy can easily be built between a company and business processes. The various transactions we make, be it orders, product sales, customer meetings, or item creation, are like athlete exercises. By collecting data from transactions, classifying, combining and analysing, we can build a much clearer and more complete picture of the situation. We can use this overall picture when planning the next measures. This applies to customer profiling, proactive maintenance, product development, and sales campaign planning. A company that does not systematically seek to create, structure, and use the data it collects is like an athlete striving to improve their results without a training diary.
The business value of the data is undeniable. Still, few companies are able to take full advantage of the data. The are several reasons for this. In terms of expertise, the most challenging, the ability to analyse and model data, is rarely the main reason why the latent value of data cannot be realized. It is often the case that the company did not originally plan the data to be utilized anywhere other than in the process in which it is created. The data has been considered as a single-use asset and its recycling and re-use has not been taken into account. As a result, the data is incomplete and erroneous – of sufficient quality to complete the transaction, but useless or even misleading when taken out of context. This situation is reached if the company does not have a clear data architecture and definition for master data and its source systems.
Another issue that often hampers data utilization is the inability to combine data between different source systems and organizations – the inability to share data both within and between companies. Building the overall view needed to create business value often requires combining different data sources. By combining different sources of information, products delivered, customers and suppliers can be modelled on digital counterparts – and a much better understanding of the business opportunities involved: when to propose product maintenance or modernization, how to launch a targeted sales campaign, how to streamline the supply chain, where to renegotiate contract prices.
As long as the competition is among fitness athletes, a company does not necessarily have to invest in a workable data strategy. But at the stage of aiming for excellence, the competitive advantage gained from the use of data in perceiving the situation and anticipating the right actions becomes critical.
With the development of information technology, collecting, cleaning, consolidating and sharing data is much easier than it was just a few years ago, and it no longer requires significant system investments. There is a growing number of high-level expert companies in Finland to train in data analysis and interpretation – and the development of the company’s own capabilities has also been greatly facilitated, thanks to investments in open in-service training in software technology and data analytics.
Nationally, a major challenge – and great potential – is associated with data sharing. Raising the level of sports coaching from the county level to the pursuit of world championships requires open information sharing and collaboration among athletes’ background teams. The same law applies in the corporate world. Few domestic industrial companies compete with each other in the same industry, so the precondition for sharing information between actors is good. If we succeed in creating an environment in which this is achieved in a safe, reliable and structured way, we can work together to accelerate the development of many national companies towards new records.
Executive Vice President, Technologies