Why is data so important? Is data the new oil?
In today’s digital economy, data is a very valuable and often untapped asset. Technology has progressed to a point where it is very accessible for small businesses to setup systems and start collecting data about their customers. Business that run on e-commerce platforms already have data collection as a core requirement.
With so much data at our fingertips, how then do we gain insight from our data? How do we get business intelligence? This is where having a proper data analysis strategy comes into play.
Stages of Data Analysis
Data analysis at its core is the process of converting raw data into useful information for decision-making and will likely include aspects of the following:
- Understanding data requirements
What are we trying to understand?
- Process of data collection
Where is our data? How do we extract it?
- Data processing
Is our data in the right structure/format for our Business Intelligence tool?
- Data cleansing
Getting rid of errors in the data.
- Exploratory data analysis
Begin to understand the data by using descriptive statistics or data visualisation.
- Modelling and algorithms
Using data analysis methods to identify and understand relationships between variables. This usually culminates into a building of a model.
- Data product
A data product is a program that takes the users input and runs it through the model in order to generate a specific recommendation for the user’s situation.
The presentation of data to users is for decision making. The better the communication of the data, the more meaningful the impact will be. The analyst will often have to take into account the level of sophistication of their audience and what is being communicated.
For example, for operational managers it would be more appropriate to consider building a KPI dashboard report that refreshes automatically. Whereas for board quarterly reports, a face to face power point presentation might be more impactful.
The use of data analysis in financial data is very powerful as it allows businesses to be more accurate in their “What If” analysis. Business ideas can be now be backed by insights from the data instead of an opinion.
Where to from here?
Accountants are naturally comfortable with financial data and our team has extensive knowledge in dealing with different accounting systems and financial modelling in various platforms. We have already helped many of our clients on their data analysis journey and are well equipped and experienced to assist you in developing this area for your business.