Becoming a Data-Driven Organization: Challenges and Benefits
What is a data-driven organization? CIO points out that, in reality, organizations that have data at their core are considered insights-driven organizations. This phrase, coined by Forrester research, points to the benefit of becoming a data-driven organization: easy access to data, which in turn, helps companies derive insights that lead to performance improvements, cost savings, and improved revenues.
Let’s take a look at the challenges and benefits of becoming a data-driven organization, then discuss ways in which your company can pursue this popular path.
More Companies Seeking Data
First, a few statistics from that Forrester research cited earlier by CIO. According to the Forrester report cited in CIO, companies pursuing data-driven paths are earning 30% more annually. Such companies have invested in the technology needed to capture and use key data to derive keen insights into all areas of business. The result is a stronger growth trajectory for businesses using this model than for those who base decisions on other factors than data.
The Challenge of Becoming a Data-Driven Organization
Although such strong growth is appealing, there are many challenges to becoming a data-driven organization. Healthcare companies and agencies, for example, must factor in the collection and use of data against HIPAA privacy laws and other laws that protect patient data. Such companies need industry-specific software that can meet their unique challenges and conform with regulations.
Other challenges facing businesses seeking to become data and insights-driven firms include:
- Employee resistance
Some managers prefer to believe that their good decisions come from instinct and feeling rather than data. It is quite true that the experience of a seasoned manager is invaluable. However, that experience, when combined with data to support decision-making, makes a powerful combination.
Data doesn’t replace the instincts and insights of an experienced manager. Instead, it supports their decisions as well as opens new areas of inquiry and thought. Data becomes the catalyst, rather than the replacement, for gut instinct. Employees who resist a data-driven approach need to understand that they aren’t being asked to check their instinct and experience at the door, but rather to leverage it along with data to do an even better job at making decisions.
- False assumptions
Another challenge facing companies looking to adopt a data-driven approach is the false assumption that collecting and using data is time-consuming.
Often, employees who were part of earlier data-adoption models are basing this assumption on negative experiences. They may have been part of an earlier movement towards data use that didn’t have the right technology in place to support the change to a data-driven model.
Another challenge facing companies is the false assumption that the learning curve toward using a new data-based system will be steep. New technology is often much more intuitive than older versions, and software vendors typically provide extensive training and support to help make adoption and rollout of new technology successful. Although everyone needs time to learn a new system, a data-based approach doesn’t necessarily mean complex or complicated software that takes forever to learn. It may mean thinking differently about the software you currently have.
- Transition will take too long
For companies that have extensive data already captured, there may be a transitional period when the implementation team has to review the current data and make difficult choices. Yes, this can take time and yes, the current data can be messy. There may be no getting around it.
However, keep in mind that the pain of cleaning up data is temporary. The benefits of shifting to a data-driven organization are long lasting. Everything worthwhile takes time and going through messy data files and cleaning up data may simply be part of the process. Like cleaning the garage, it’s a chore that may have been put off too long, but one that once completed, will make a noticeable difference.
Benefits of Becoming a Data-Driven Organization
Given that these very real challenges may seem like insurmountable roadblocks, is switching to a data-driven organization worth the effort to overcome these challenges? Let’s take a look at the benefits. They may outweigh the challenges for your company.
- Empowers all
Organizations that rely more on managerial experience or instinct often find themselves following certain managers down some interesting pathways. Often, the loudest—or most beloved—manager gets to make the most decisions simply because, “We always trust Carl” or “Kathy never lets us down.”
That’s great for Carl or Kathy, but what about the others who may have great insights to share? With data available for all to share, review, and discuss, all managers are now empowered to share their insights. If they can back up their assertions with data, their insights may be the fresh ideas companies are looking for to spur growth and innovation.
- Focus on what matters
Without data, it can be difficult to determine which activities, products, or services make the most profitable impact on the bottom line. With data, assumptions about what works can be challenged and reviewed. It enables companies to focus on what matters and to set aside unprofitable activities. Data will reveal which products to focus on and which ones to avoid, which services are profitable, and which drain resources.
- Challenging assumptions
Every company has beliefs that are sacrosanct. Widget X must be in the fall catalog because it sells the most. Activity Y is essential to the company’s fiscal health. These and other assumptions take root in the corporate consciousness and may be difficult to challenge without data.
With data, it becomes apparent whether or not Widget X really outperforms other products in the fall catalog or whether Activity Y must be completed in order to remain profitable. Data enables companies to challenge all assumptions and make better decisions over time.
- Supports continual growth and improvement
Lastly, data helps support continual growth and improvement. Incremental approaches can be tried, measured, and rejected or accepted based on data. Companies can examine all areas of expense and find new ways to cut costs without sacrificing quality or service. Data-driven organizations can find new and innovative ways to use their data to spot areas for increased revenue and decreased costs. Using data wisely supports continual growth and improvement.
Ready to Become a Data-Driven Organization—an Insightful One?
Becoming a data-driven organization takes time, but it is time well spent. First, analyze your current data. Are you collecting data? Who has access to it? Is it clean—that is, without duplicates, extraneous information, and outdated information?
If your current systems are deemed inadequate to the task of transitioning to a data-driven organization, it’s time to start searching for a new system. Cloud ERP offers exceptional data collection, and with the addition of a strong business intelligence (BI) tool with data visualization, a great way to transition into becoming a data-driven organization without a steep learning curve.
We welcome your inquiries into how you can transition into becoming a data-driven organization. With the right tools and approach, you can make the switch—and develop into an insightful company, using data to fuel growth and innovation.
Mindover Software Consulting
At Mindover Software, we understand the challenges faced by home healthcare agencies seeking to improve customer service. We’d be happy to help you get started. You may contact us or call 512-990-3994 to learn more about software that enhances customer service.