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The importance of data analytics

home-technologyHere in 2015 data has become one of the most important resources we got. Especially if we know how to use this resource properly. If you run a busines, you are likely to gather a lot of different information over the years. Most companies just discard most of this, and only focus on a small amount of those data. But the key to success is to include as much data as possible and use this data to improve your business. It can for instance be used in a Decision support system, to help you make the right decisions based on facts, rather than just going with a feeling. Last week I installed a BI system at Brænde og Briketter, a firewood reseller, and they where shocked to see how much information, they could get out of their data, and how important it was for the their company.

For instance, you are thinking about expanding your main product line with 50%, but are not quite sure if the investment will pay of in time. You can’t just take our current income and expenses for that product and multiply it with 1.5 and think that this will be the new number. There are tons of variables that will affect this number, small things such as, can you use the existing trucks to ship the additional products, and though saving some cost on transportation? Can you use the existing storage facilities or you will need to expand? How much extra machinery will you need, and how many more employees? With a good DSS a lot of these data will already be in your system, and it will make it a lot easier to see if it’s worth expanding or not. It may not be able to tell you, if you can sell the different products, but can help you figure out how much extra it will cost to increase the production. Then it’s up to you to decide if you think you can sell 50% more or not.

This is just one example of how you can use data to make better decisions, but data analytics are used for a lot of things in todays world. For instance if you have a webshop selling certain products and you spend a lot of money on different types of online marketing. Then it will be quite useful to see which of the many marketing campaigns that is worth the cost. For instance by analysing the data, and tracking sales, you may see that Adwords gives you a lot of sales for your money, but those 2 very expensive banner ads you got a the home technology site is giving you a lot of traffic, but none of the visitors buy anything. If you don’t anylyse your data, you would in this example, be likely to continue with the home technology ads for while, and spend money on a product that won’t benefit you in any way.