by Justin Fitzpatrick, CEO, DueDil
Lots of companies think they make decisions based on data, but few actually do. Here are some of the reasons data isn’t as central to your decision-making as you think, and what you can do about it.
Most business leaders agree that data should inform decisions on developing strategy and tracking execution. Companies large and small invest thousands (in some cases millions) of pounds each year in software, systems and people to collect, extract and interpret data to help run the business.
Yet these investments very rarely transform the way the business operates. In a survey of SME decision makers, over half cited a lack of confidence in data management practices as a cause for concern, even though 78 per cent believed that data was important in helping them gain a competitive advantage.
The reason much of this investment fails to achieve its potential relates to the way these systems and data stores interact, and how leadership sets priorities.
The golden source
There’s generally a hierarchy, either spoken or unspoken, in the data that leaders look at to run a business. At the top are systems of record, sometimes referred to as the “golden source”. Systems of record form the foundation of an organisation’s understanding of its business and serve as the reference point for other information.
The most common systems of record are customer relationship management (CRM) software, accounting packages and bank accounts. Each system of record has its own challenges, which generally revolve around issues of accuracy, latency and categorisation.
Beware of overreliance on financials
To have a clear sense of direction and control over execution, systems of record and any other data stores need to be in sync. Investment in fintech and government-backed initiatives such as open banking are encouraging providers to join up different data sources to provide a fairer and more competitive journey for personal and business customers. In turn, this has led to a flurry of activity among companies trying to join up systems of record.
The issue, however, is that many of these efforts focus on accounting packages and bank accounts without looking at how this information ties back to the customer record.
Financial and accounting data is definitely important but often lags, sometimes badly. Financial information in isolation isn’t going to tell you how you should allocate territories so your sales team hits quota next quarter. Good strategy starts with insights on the customer segments you’re serving, and this requires you to look more closely at your CRM.
Strategy starts with insights into the customer
Creating a joined-up view of your business is the key challenge for any organisation that wants to be more data-driven. This isn’t just about good housekeeping. MIT Sloan found that companies lose between 15 and 25 per cent of total revenue to bad information. So where should you start? If you guessed “the customer”, you’re on the right track.
Your CRM system should be one of your most important strategic assets. For most organisations it’s a liability, or at least a quickly depreciating asset. That’s because the half-life of the information populating your CRM is shorter than you think, and that’s assuming it was correct to begin with.
By maximising your CRM’s potential as a system of record, you’ll be able to manage the challenges of accuracy, latency and categorisation present in the other data in your business. More importantly, it will be easier for leaders to extract insight into how execution needs to evolve to better support the strategy. This is the beginning of being a truly data-driven organisation.
For a real-life example of how a conversation with a client brought these problems to life and how we went about solving them, check out our latest post on DueDil.com.