January 30, 2023 By: Ankur Gupta
In a corporate context, data provides a decision-making environment similar to a personal one, in which past choices and preferences are leveraged to improve values, boost productivity, enhance corporate efficiency and improve organizational effectiveness.
According to the latest market research on data-driven decision-making, about 58% of businesses tend to make their business choices based on intuition or experience rather than statistics or data analytics. However, there is less than a 50% agreement among companies that information is highly valued for decision-making or treated as an asset today. In the future, two-thirds of companies plan to use the information to identify trends and behavior and predict new opportunities.
Market reports, research, data analysis, and interpretation are some of the basic components that serve as the basis for strategic decisions for a company. However, data transformation is a holistic approach that needs to be encompassed not only in the C-suite but the whole organization.
The reality of the data determines every department’s work in a company that values data. The combined effort of all the parts of the organization enhances the whole when the data-driven vision supports the larger goals and objectives.
Understanding Data Driven Business
Even though it’s acceptable to go with one’s gut sometimes, the vast majority of business-related decisions should be supported by incisive metrics, facts, or insights pertaining to the objectives, goals, or initiatives that can guarantee a solid foundation for management reports and business operations. Making decisions based on data can help a company grow while also enhancing its ability to adjust to a constantly shifting business environment. All corporate operations, plans, and activities have to revolve around it. Fundamentally, using verified, evaluated data to make decisions rather than winging it implies working toward important business goals.
A data-driven choice is one that is supported by empirical facts, allowing executives to make wise decisions that have a favourable impact on the company’s bottom line. Data-driven organizations are 20 or more times more likely to win new clients, and six times more likely to maintain them, according to findings from McKinsey Global Institute research. A decision-making process that is primarily based on guesswork is the antithesis of one that is data-driven. Data-driven company may consult their instincts when making decisions, but they only take precise measures in response to what the data shows.
Data-driven decision-making is the process of making educated and validated judgments using data as the base element, that helps businesses overcome biases and make the best management decisions that are in line with corporate strategy.
Promoting Data-driven Decisions
Globally, data is an ever-growing entity, projected to grow to 175 zettabytes in 2025 from 45 zettabytes in 2019, according to a report by IDC. Huge data seas are filled with an increasing amount of data from data centers, the cloud, and intermediary data processors like cell towers and substations. Businesses that make the best use of such information have a clear advantage compared to those that don’t.
Depending on the sector, businesses may use data in many ways. Operational data from systems and equipment, for instance, can provide information on productivity and efficiency in industrial firms. Leaders may devise methods to simplify crucial operational areas by analyzing which procedures create delays. For instance, healthcare providers use patient information gathered during patient intake procedures and kept in systems like electronic health records (EHRs) to better understand the requirements of their patients. Data also supports business operations. For instance, to enhance recruiting procedures, human resources departments use data from applicant monitoring systems and leverage data to reveal trends that assist HR managers in creating plans to help retain top people and create more effective and contented workforces. Marketing departments may execute cross-functional projects with the sales and customer care departments to improve customer experiences by using data to disclose insights about consumer behaviour.
Data-driven decisions create plenty of opportunities for a business to grow. The steps to promoting business value with data transformation cover:
- Build an Agile Database – Analysts need to identify whether they are looking for quantitative or qualitative data before choosing a data collecting strategy, sometimes referred to as a data mining approach. While qualitative data is descriptive, quantitative data is numerical. Experimental research, which manipulates one or more variables and assesses their effects on other variables, is a quantitative approach to data collecting. A qualitative approach could involve conducting interviews or surveys, which entail posing questions to respondents in person, over the phone, or online. A recent study indicates, 71% of businesses suggest the use of automation and AI for smarter and informed data-driven decisions. This idea makes the supposition that accurate, trustworthy, and actionable corporate data may be utilized as a solid foundation for all business decisions.
- Set up (or strengthen) bodies to drive cross-departmental alignment for data governance – According to a report by BI-Survey, 60% of businesses indicated that the finance department was heavily involved in data management and governance. However, to get out the best from data transformation, businesses need to set up Business Intelligence Competency Centers to improve data governance. Research shows that 52% of best-in-class firms are considerably more likely to be accountable than ordinary firms and laggards.
- Define and pervasively use KPIs across the organization – Businesses need to unify success metrics and concentrate data governance on crucial data in order to develop a uniform decision-making basis. A recent study indicates only 36% of businesses, that have a defined, standard set of KPIs in their firm, are using them extensively. KPIs allow a business to have an extensive insight into the database and leverage the required data for required operational improvements in the business.
Benefits of Data-Driven Decision-Making for Business
Businesses can produce real-time insights and forecasts to improve their performance by using data-based decision-making. In this way, companies can evaluate the efficacy of various methods and decide which business actions will result in sustained growth.
There are several reasons why every contemporary organization should prioritize using data to inform choices as part of their culture. Some of the benefits include:
- Continual Organizational Growth – Consistency and ongoing development are fundamental aspects of data that influence decisions. Companies are now able to focus on critical insights based on a variety of functions, operations, and departmental activities thanks to data-driven decision-making. The ability to create practical standards that lead to ongoing development and growth—the essential elements of long-term success in today’s cutthroat digital era—will be empowered by a series of data decisions taken consistently.
- Knowledge & Innovation – Information is typically seen as a genuine asset more by businesses that use a collaborative approach to decision-making than by businesses that take other, less clear-cut ways. Additionally, when you see digital insights as a true asset, you will promote a culture of data-driven education, creating a business environment where everyone uses the information to their advantage to advance their knowledge and perform to the best of their ability. An exclusive study by MIT indicates that the companies using data-driven insights experienced sharp growth in Productivity by 4% with a 6% rise in profit margins.
- New Business Opportunities – Making decisions based on data results in the identification of fresh and intriguing business prospects. Drilling down readily available visual data will provide a comprehensive perspective of the firm’s fundamental operations, ensuring that a series of sound decisions are made that are advantageous to the commercial development of a corporation.
A company will find possibilities to enhance its growth, make new connections in the business world, and develop innovations that will provide them a crucial competitive advantage if they are armed with deep-dive insights that will improve its judgment. - Better Communication – Every department will be able to easily exchange insights and work together on crucial initiatives when they operate as one unified, data-driven entity. This will make a corporation more intelligent and lucrative in the long run.
- Unrivaled Adaptability – The Digital World is in a constant state of flux and data transformation allows a business to grow and evolve over time making them more adaptable to the ever-changing scenario. Data-driven insights allow a business to connect to emerging trends and help in developing a deeper understanding of the patterns. The data-driven decision ensures competition, relevance, and profitability at all times.
Leveraging Data Transformation to Gain Valuable Business Insights
A business in order to improve its overall output, and increase efficiency and performance, must invest in the required data integration approach to effectively modernize. Five real-life strategies to transform a business into a data-driven business are discussed below:
- Creating personalized customer experiences in physical and virtual worlds – Virtual world like metaverse is going to emerge as the next new sector that has the potential to provide a more individualized consumer experience. Businesses with a good understanding of their clients may design virtual stores that are hyper-personalized and only show what the client would be interested in, in contrast to real retail stores selling things to everyone. The ultimate goal is to enhance brand loyalty and give individuals a tailored experience.
- Generating new revenue streams through data monetization – Around 50% of the business operations are based on information. It is imperative that businesses come up with original insights while also enhancing their data collection techniques with higher data quality and compliance with privacy laws. Increasing data sharing among businesses allow technology firms to gain a 360-degree view of consumers they could not access otherwise.
- Empowering sustainable decision-making – ESG (environmental, social, and governance) concerns are forcing firms to reconsider their business practices. Almost every area of corporate operations is touched by ESG, including decisions on where to locate buildings, future supply chain routes, and how much insurance to purchase. By analyzing data for patterns in the climate, the best delivery routes, and population growth patterns, artificial intelligence systems help companies make better ESG decisions.
- Enhancing productivity – In the digital environment, precision is almost everything. Businesses can dramatically improve productivity along with the resources by evaluating, combining, and utilizing the correct amount of data at the exact moment to evaluate, forecast, and prescribe actions. With quality data and efficient data governance, around 62% of businesses consider data as a critical asset for improving business productivity and business value.
- Boosting product or service innovation – Data transformation is a transformer when it comes to curating and customizing business needs. An efficient customer database allows a business to gather better insight into customer behavior and market pattern. According to research, 96% of businesses have been successful in using data-driven insights for better performance and customer service.
Conclusion
Data is the major factor promoting corporate expansion and is crucial to preserving a competitive advantage and commercial relevance. Data has value because it has the ability to produce insights that improve business. Organizations should thus establish the groundwork for streamlining their data management procedures and real-time analytics while creating a culture that is data-driven.
Company analytics solutions need to be redesigned as smarter mechanisms since varied business activities and technological applications provide diverse data. JK Tech is wholly devoted to assisting you in reaching the greatest data-driven business decisions. By finding innovative methods to integrate a high-performance combination of insights, forecasting, visualization, advanced analytics, and more, we assist you in using the highly potent business analytics capacity. Our solutions integrate the greatest business reporting tools with a modern approach to assessing your choices so you can start seeing results.
