Did you know these 3 benefits of data?

More than half of enterprises report that they use data analytics to drive strategy and change.

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‍These are not just some experiments for them; data is an integral element of their business.

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Statista states that the $ amount invested in data analytics tools is growing rapidly:

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Companies are understanding more and more what value analytics can bring. They know that they need the right tools to gain this value, and are willing to invest in it.

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So how can data analytics help to improve business performance?

There are three main categories:

1. Productivity gains

Getting more work done in less time.

This means automating manual tasks, which allows businesses to be more productive.

For example, in most companies, there are people that are manually copying data from one Excel worksheet to another.

With analytics, a business can identify the data needs and automate the Excel processing.‍

2. Profitability increase

Increasing profitability means decreasing costs, increasing revenue, or both. Usually, this comes from having more knowledge, which businesses can leverage to increase their profits.

Take the following perspective:

Every day, a business must make a couple of decisions that will influence the direction of the organization.

If they know what decisions to make and what actions to avoid in order to maximize profits, they will get more profits.

For example, if a business knows exactly what they must change in a product to sell it more often, they will gain more revenue and therefore more profits (if the product has a positive profit margin).

Data helps businesses to concentrating their efforts on things that move the business forward.

3. Risk mitigation

Risk mitigation is the elimination of uncertainties in day-to-day business activities. Risk can be defined in many ways, but the easiest one to understand is operational risk:

1. People

People risk refers to the possibility of monetary losses and poor social outcomes as a result of human resource management.

This includes the failure to recruit and keep competent employees. And can lead to human mistakes, fraud, or other unethical activity.

2. Process risk

Process risk is the possibility of lost earnings and poor performance that comes from internal operations.

3. Systems risk

Systems risk is the risk of financial losses and negative social performance as a result of internal system failure.‍

4. External events risk

External events risk is the risk of financial losses and negative social performance related to external events.

5. Legal and compliance risk

Legal and compliance risk refers to the possibility of losses from non-compliance with regulations and laws.

These operational risks exist mainly because individuals are unaware of the events that can damage the business. Data help by informing people about risks in the business.

Real life use cases

You are probably curious about some use cases of data in large businesses. Below I linked a use case for each benefit:

Increasing productivity:

Pepsico decreases analytic build time by 90% using data analytics. link

Improving profitability

Netflix saves $1 billion a year using artificial intelligence. link

Risk mitigation

Visa prevents up to $25 billion in fraud using artificial intelligence. link

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Hopefully this inspires some of you to look further into what data can do for your company.

If you enjoyed it, please forward this email to friends who want to know more about data in business.

See you next week!

Thomas

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