Moving from instinct to insight
In order to unlock the rapid growth potential of their business, SME leaders should look to the secret weapon that’s right under their noses: data. Thinc co-owner and Director, Richard Stathers, explores how SMEs can use data to create an insight-driven decision-making culture.
At one point or another, almost all SMEs tend to fall into the same decision-making trap. The leaders, whose instinct has helped the company become a viable proposition, face mounting pressure, as their opinion is required on every aspect of the business.
As such, decisions are often made based on ‘feel’, and that type of decision-making cannot be done with consistent accuracy, and at speed.
So, one of two things start to happen. Either the leaders put the brakes on, recognising they are the ‘blocker’ as the decisions form an orderly queue. Or, decisions are made with an acceptance that as the pace quickens, the success rate inevitably takes a hit.
To exacerbate this issue, the senior team has likely created a culture that encourages all complex decisions, either small or large, to head to the top.
With issues mounting, it can become near impossible to make significant decisions, and at pace, using only the instincts of a few select individuals.
But, reassuringly for business owners and leaders, the answer is right under their noses. The data that is there—but remains uncaptured and unanalysed—is proven as one of the highest impact assets an SME can adopt as it fuels its growth.
How data can help to drive a business forward
Data can be used to create real competitive advantage. Firms that use data actively are three times more likely to say that analytics contributed to at least 20% of their revenue.
The application of data in business decision making is nothing new. However, data has long been viewed as a tool for large enterprises, rather than something that can benefit SMEs too.
Technology has changed that landscape. The same benefits enjoyed by large multinationals can now be utilised by ambitious SME leaders who are looking to scale, gain an edge on competitors, and get the best from their teams.
But what difference can data really make?
To answer this question, a regular survey carried out by management consultancy firm McKinsey investigates the relationship between company performance and how data is used to provide insight within an organisation.
Whatever stage of the data journey you're at—if you're looking to improve how you gather and use data, or you're starting from the very beginning and looking to grow—we can help.
The survey consistently finds that organisations with a strong data culture significantly exceed their business goals, versus those that consider data to be less critical.
For example, in a 2019 edition of the study, the findings showed that 48% of businesses with a strong analytics culture significantly exceeded business goals, while only 22% of those businesses without an analytics focus experienced the same thing.
But how can you evolve your business from one that leans primarily on gut instinct to one that uses insight to make better decisions?
The benefits of an analytics-driven culture
A robust data culture within your business can both give you the edge against your competitors, and it can bring out the best in your people.
Creating a data-driven decision management (DDDM) culture benefits almost every aspect of an organisation. The key benefits are:
Better processes can come about from a conscious move to begin gathering decision-making data. Even if embryonic and disjointed, the creation of a backlog of information will stand you in good stead now and in the future.
Improved competitive position
Here, you’ll use the data gathered to give you an edge against competitors. Your insight might be fractured, but the fruits of your labour will show.
Better products, through improved understanding
At this point, data has started to have a significant positive impact on the business. To maximise on this success, an Enterprise Resource Planning (ERP) solution can pull together disparate data to offer a holistic snapshot of the business. Some tools are even built with smaller enterprises in mind. For example, ERPs such as SAP Business One and Sage 200 are designed around the needs of rapidly growing SMEs.
Improved capabilities of employees
The combination of a mindset change and ERP implementation will improve the skills of staff and employees by offering them more headspace to focus on challenges, rather than deciphering decisions based on hunches.
Performing better risk management through early warning and scenario analysis
At this more advanced level of analytics integration, the business will be able to use insight tools to anticipate future trends, as well as carrying out a detailed analysis into every area of the business. This powerful forecasting ability results in more accurate planning and a workforce who can see the value they bring at any given point.
For example, if a shipment of product comes in a month later than anticipated, how many customers (and which customers) will this affect? What’s the impact on the supply chain? Can you identify alternative sources for the same product. A robust ERP and analytics-driven culture will position you to answer these queries quickly and efficiently.
So, where are you on this journey? Most SMEs will use some form of data. Understanding your current level of sophistication, and seeing where data-driven decision management can take you is key.
Deloitte’s five stages of maturity
The aim is not to take a single-leap transformation. Instead, the approach should be to define a DDDM strategy that is achievable, that will make incremental improvements to the business over time, and with a method that can be embraced by every employee.
To this end, Deloitte identified the five stages of maturity for insight-driven organisations. If you’ve begun to implement analytics into your business, figuring out where you sit on this scale will help you navigate to the next stage.
1: Analytics-aware: a knowledge of the fundamentals, but without a system in place or an analytics strategy.
2: Localised analytics: a business with basic analytics capability, but data silos across the company.
3: Aspirational: analysis is performed beyond silos in the central business systems and across multiple business functions. It would be at this point that an effective ERP could push the business forward, supporting the unification of this data.
4: Analytical companies: those that take data from broad sources, generating meaningful future-looking scenarios and using insight to develop new business ideas.
5: Analytical competitors: using data to manage performance operationally and strategically. An organisation that considers data a source of value and that can be used to create and preserve value. In short, an organisation that keeps pace with technology change.
Data can help identify hidden patterns and the building blocks for insight where previously instinct-based decisions were made. This data enables a creative discussion to take place and scenarios to be played out, resulting in greater resilience, competitive advantage, and a more intelligent company.
Of course, leading companies don’t rule by data alone. They create insight and data strategies for the longer term, making high-quality data part of every employees’ workflow. Without insight, data is meaningless. As such, there will always be a need for human expertise to translate data into value.
Combining a data strategy with the right technical infrastructure and encouraging employees to apply analysis day-to-day can play a massive part in the ongoing success of your organisation.
Whatever stage of the data journey you’re at—if you’re looking to improve how you gather and use data, or you’re starting from the very beginning and looking to grow—we can help. Contact James Peel (Head of SAP) or Contact Gary McKnight (Sage team member) today.
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James Peel, Head of SAP
James works with small and medium sized enterprises all over the UK to help them achieve the business benefits associated with use of SAP Business One.
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Gary McKnight Sage expert
Gary works with ambitious SME leaders to help realise their business goals. His experience and knowledge of Sage products is unrivalled and he spearheads our drive for customer service excellence.
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