These days, one of the biggest buzzwords in business is analytics, and the benefits that analyzing business data from all sources has for running a more efficient, productive and profitable enterprise. Although the concept of looking at business data isn’t necessarily new, the tools and techniques that businesses use today, and the expanded applications of the information, are constantly evolving and growing more powerful. This has many businesses wondering how they can get the most from their data — and other businesses dismissing the idea altogether due to some common misunderstandings. The fact is that all businesses can benefit from an analytics program of some type, and believing the following myths can lead to significant costs.
Myth #1: Using Analytics Guarantees Good Decision Making
In some organizations, analytics and data have replaced judgement, at least in some part, when it comes to making decisions. In other words, rather than look at problems or ideas from all perspectives and use tested decision-making processes, entrepreneurs and managers are making decisions based entirely on data. Not convinced? One study of 5,000 executives from 22 companies revealed that two-thirds of them make decisions based on either data or gut instinct alone, not a balanced approach that combines judgement and analysis.
The problem is that data, no matter how much you have, is only part of the equation when it comes to making solid decisions. While data can certainly guide decision-making, it doesn’t always tell the whole story, and there are times when the data or analysis itself leads to flawed conclusions. In short, analytics and business intelligence are tools, which when placed in the right hands, can lead to good decision making. When they are used as the only decision point, though, it’s possible that your business could go wildly off course.
Myth #2: Business Analytics Requires an Engineer or Programmer
Some businesses have resisted implementing analytics because they believe that they need to hire a computer programmer or engineer in order to gather and analyze information. The fact is, with the explosion of self-service tools for business analytics, and training programs like the William and Mary MSBA, anyone with a comfort with numbers can become a data scientist. One does not need to be a programmer to use tools but rather learn how to use the programs to gather and analyze data. That doesn’t mean that business intelligence tools should be made available to everyone in the organization, as that can lead to flawed conclusions, but anyone with a quantitative background and the proper training in data analysis can manage your company’s analytics program.
Myth #3. Every Aspect of a Business Needs to be Measured and Analyzed
Some entrepreneurs believe that for an analytics program to be successful and worthwhile, everything needs to be analyzed. However, collecting and analyzing every last detail is not only time consuming and a poor use of resources, it can also obscure the most important insights that your business needs to make good decisions. In short, analyzing everything can lead to “paralysis of analysis” and quickly become overwhelming. A better approach is to identify the key metrics that relate back to your stated business objectives and focus the analytics program on those areas.
Myth #4: Small Businesses Don’t Need Analytics
In the past, business analytics and intelligence was largely considered something for large organizations that had the resources and expertise required to collect and analyze vast amounts of data. However, thanks to the proliferation of BI solutions, and the increasing number of professionals seeking training in this area, small businesses are now able to more effectively tap into their data. Small business can benefit from the insights created by data analysis as major global corporations and might even have an easier time sifting through the data to find the most important nuggets of information. In short, small businesses need data analytics too.
Myth #5: Analytics Projects Are “One and Done”
Finally, another costly myth is the notion that business analytics is a project, and once you have mined the insights you need, you don’t need to continue collecting and analyzing data. Nothing could be further from the truth. To be truly effective, analytics needs to be an ongoing project, with data continually refreshed and reviewed to identify any new trends or changes. Without this continuous analysis, your business risks becoming stagnant, or you will fail to adjust to changes and face serious problems in the future.
Business analytics can be a driving force for bigger profits and a more efficient enterprise — but only if you use it correctly. Don’t fall for these common myths, or your company may fail to reach its full potential.