Insights derived from data and information drives business and organisational success, enables effective and efficient problem-solving and decision-making. Data-led decisions produce better outcomes for all stakeholders including small-and-medium-sized businesses (SME’s).
To thrive in this new digital economy, data and the proliferation of information must be strategically harnessed and utilised to drive more informed decisions that create sustainable value for customers, employees, shareholders, investors, and other stakeholders. It also increases chances of raising finance from lenders and obtain credit from providers of credit.
Business challenges and activities
Organisations and businesses including SME’s continually experience a range of challenges, problems and/or obstacles. These challenges and obstacles make it difficult for these entities to achieve its organisational, operational, strategic and/or financial goals. Examples of such challenges include:
- Lack of reliable information about past, current and future cash flows, revenues, operating and capital expenditures,
- Uncertainty whether a new strategic direction is appropriate in light of new, emerging circumstances,
- Lack of information whether other assets, infrastructure, plant and equipment are optimally utilized, maintained and when such items must be replaced and what are the cost of replacement, etc.
Organisations and businesses including SME’s also set strategic, financial and operational objectives. However, such objectives may not be underpinned by credible and reliable data and insights. Consequently, these objectives could be over- or understated which could result in incorrect allocation of resources and capital.
How data insights are used by businesses
Many successful businesses use data insights to create sustainable value for its stakeholders. Examples of such usage include:
- Data insights can be used to support strategic decision-making,
- A specific workflow can be streamlined with an artificial intelligence solution that performs routine decision-making,
- Statistics SA analyses and interprets complex statistical data that it collects and develops insights from such data that could enable businesses and organisations to develop new strategies and/or review its current strategies,
- Market research agencies collect, analyse and interpret data to develop insights about new market trends that can enable businesses and organisations to develop new products, craft relevant advertising messages, develop and/or update marketing strategies,
- Retailers harness information from inventory management systems to plan for the optimal deployment of cashiers and merchandisers, plan the timely purchase and receipt of economic order quantities of goods, plan promotional campaigns and project its outcomes,
- Investors use information from due diligence reports to make optimum investment decisions and allocate scarce and limited capital optimally,
- Insights from data and information reports trigger furthers discussions and considerations by management to create value.
Other reports that provide information and insights for decision-making
The following reports, amongst others, provide management with insights:
- Financial statements – provide information of businesses about its financial performance and position, cash flow information and changes in equity to investors and other users when deciding whether to provide resources to a company. These financial statements are also used to measure the performance of businesses and organisations. In addition, it is used to generate further insights for discussions, decision-making, planning and control,
- Management reports – provide relevant information to assess whether a business is profitable, has adequate liquidity, assets are used optimally, the business is optimally geared, measurement of progress and results of strategies implemented, respectively, etc,
- Market reports – provide understanding of market sectors, competitor activities, customer dynamics and trends which can be used to measure the efficacy of current marketing strategies, identify new market opportunities and leverage the competitive position of the business,
- Financial models provide value-adding insights, amongst others, about the potential outcomes of current and proposed financial and investment decisions. For example, financial models can be used to measure the impact of various pricing structures on the profitability of products, estimate the required investment, cost and profitability of a proposed new project, measure the impact of different capital structures on the risk profile and return of on equity of a company, etc.,
- Integrated reports – provide insights about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation, preservation or erosion of value over the short, medium and long term. Integrated reports enable integrated thinking which drives integrated decision-making which in turn create better outcomes, and a holistic approach to resource allocation.
- Risk registers and heat maps – provide insights about identified risk and how to manage and control it.
Other areas that data insights could leverage outcomes
Data insights have many advantages and could also be used to:
- Develop and review business strategic direction,
- Plan and control business performance,
- Optimally manage business investments and assets,
- Analyse and optimize the cost structure of businesses,
- Evaluate the profitability of products and services that are sold to customers,
- Evaluate the profitability of clients that are serviced,
- Develop optimal working capital strategies and capital structures,
- Optimally allocate scarce and limited capital and resources,
- Review the efficiency of operations as to quality, cost and customer services,
- Expand business operations to grow revenues and market share,
- Enhance the marketability and valuation of a business to buyers and sellers,
- Develop new markets for existing products and services and/or diversify business offerings, etc.
Data management value chains create data-driven outcomes
Data management value chains enable the creation of successful and data-driven outcomes. Data management value chains consist of processes associated with gathering, sharing, analysing and communicating insights arising from data. These processes are:
- Data gathering – ensures data collected has integrity, is clean and reliable and complies with relevant laws and regulations such as the POPI Act of SA,
- Data sharing – data is protected against unauthorised use and changes, theft, the use of data is adequately controlled and the origin of the data can be demonstrated,
- Data analysis – complex data is analysed and interpreted to develop insights to support decision-making,
- Data communication – business advisors use insights derived from data analysis to provide value-adding advisory services to clients, provide context of the insights presented to potential users and provide strategic inputs to decision-making. Management uses such insights to support business, financial and/or operational decision-making and problem solving. Such insights also enable decision-making that can lead to both profitability and sustainability. However, the use of derived insights is based on an understanding of the strengths and limitations of the data, and the assumptions and models which underpin the derived insight.
Data insights drive the survival, prosperity and growth of SME’s
The development and growth of SME’s are seen as a panacea to South Africa’s ever-growing unemployment. SME’s are also expected to contribute significantly to the economic growth of South Africa, as in other developed and developing countries. However, according to research data, 80% of SME’s fail within the first 5 years. Some of the failures are attributed to a lack of business knowledge and skills. The lack of such skills could lead to the inability of business owners to generate or obtain relevant and reliable data insights that could enable them to manage their business operations optimally, identify opportunities and mitigate potential threats and risks.
Therefore, SME’s are urged to invest in the production and procurement of data insights that could enable it to drive its survival and leverage prosperity and growth.
Our article “You can’t manage what you don’t measure” also outlines the importance of data insights in creating successful outcomes.
About our company
Our company, Bethanie Management Consulting CC, has the expertise, experience and capabilities to create value for SME’s, large businesses and organisations. We also compile and prepare reliable management information and data insights that enable businesses and SME’s to leverage effective and efficient decision-making and develop and implement appropriate action plans.
For more information on how we can help you to up your game, please visit our blog at www.bethanieconsulting.co.za/blog
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Contact us
Please call us at 011 042 9768 or 072 296 1281 (Virgil). Or chat to us on WhatsApp. You can also email us at virgil@bethanieconsulting.co.za. Or you may contact us by completing our online form for a call back.