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. Even relatively small companies invest hundreds of thousands or millions 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. A recent survey of C-level executives found that 69% felt they had not created a data-driven organization. The reason many of these projects fail to achieve their potential relates to the way these systems and data stores interact, and how leadership teams set their priorities.
The Golden Source
There’s generally a hierarchy, either spoken or unspoken, in the data that leadership teams look at to run the business. At the top are systems of record, sometimes referred to as the “golden source.” Systems of record form the foundation of an organization’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 categorization.
Beware of Over-Reliance 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 synch. Thanks to the increasing levels of funding into Fintech and the implementation of new paradigms such as Open Banking we’re seeing a flurry of activity among companies trying to join up these 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 on the Customer
Creating a joined up view of your business is the key challenge for any organization that wants to be more data-driven. This isn’t just about good housekeeping. MIT Sloan found that companies lose between 15% and 25% 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 organizations 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 maximizing your CRM’s potential as a system of record you’ll be able to manage the challenges of accuracy, latency and categorization present in the other data in your business. More importantly, it will be easier for your leadership team to extract insight on how execution needs to evolve to better support the strategy. This is the beginning of being a truly data-driven organization.
In the next post in this series I’ll look at a real-life example of how a conversation with a client brought these problems to life and how we went about solving them with the development of our latest product, DataWorks.