By Jack DiMatteo
If I had a dollar for every time I heard, “If we could only get that information out of our system…” In all likelihood – you probably can! The data is in there, why can’t you access it?
I’ve spent plenty of time developing decision support tools that go beyond the basics of standard reporting. A few examples that come to mind:
CASE: A college wanted to know if the students enrolling in classes at the new location were coming from the surrounding suburbs or drawing students away from existing locations.
REMEDY: Wrote a report linking class enrollment to the student master files to identify where those students enrolling in classes at the new location resided. The report revealed almost 90% of new enrollment was coming from the surrounding suburbs.
CASE: A company was sending out catalogs (after a cold call) and wanted to know if it was generating any new business from the catalog distribution initiative.
REMEDY: Wrote a report that showed how many new customers that were sent catalogs actually placed an order within the next year. The report exposed the fact that sending catalogs generated almost no sales. This caused the company to re-evaluate the whole process and put in critical follow up steps to increase the conversion rate.
CASE: A company had 3 locations with 5 distinct sales generating departments located at each one. They wanted to determine profitability by location and department.
REMEDY: Wrote a report that produced P&L’s that sliced across every location/department combination management wanted to see. For the first time, department managers had accurate numbers and the visibility necessary to manage their operation. The reports were used by department managers, corporate executives and the acquiring company during negotiations when the entity was sold.
As the saying goes, “In God we trust - everyone else bring data”. Why does any executive or business owner continue trying to run a company or department without the benefit of the best available information? Some common reasons I’ve seen:
1. People tend to work in silos. Accountants don’t think like sales people. Order takers don’t see the downstream effects of incorrect inputs. IT people often don’t understand the underlying business flow. They focus on their one narrow aspect – not the bigger picture. No surprise there – it’s what they are paid to do! It may require linking information from several areas. It’s a rare breed that has the ability to see all sides and turn raw data into actionable information. Looking at things only from their own perspective, entrenched staff tells executives/owners it’s just not possible to get the information they seek. This perception often goes unchallenged.
2. Lack of resources. The staff may know they can extract the requested information, but lack the resources or skills sets necessary to develop reports and test for accuracy prior to releasing to executive management. This is where weighing the cost of doing nothing versus hiring a dedicated resource comes into play. I once created a report/routine that automated a process and eliminated a $50,000/year plus benefits position. Do you think the organization got value for the week worth of time they paid me?
3. Complacency. When are you going to get sick and tired of being sick and tired? “It would be nice if we had the information”... “I’ll work on that next week”… “I’ll put somebody on it after the close”… The list of excuses is endless, but the result is always the same. Nothing changes! You hobble along getting 50-75% of the picture and it’s enough to run the business. You haven’t reached a pain point that makes getting the information absolutely necessary.
Ever try convincing a successful small business owner they could make a lot more money by doing things a different way? They ponder your suggestion - then consider they sent their 3 children to the best schools in the country, have 5 vintage cars sitting in the warehouse, golf any time they want, have absolutely no retirement worries and conclude they must have been doing something right all these years before you came along. They make a compelling argument – but if you could raise profit by 20%, 30%, 40% (or higher) why would you not at least consider the new approach? Is there such a thing as too much money?
In today’s competitive market you need an advantage. Relying exclusively on narrowly focused, historical data puts you at a competitive disadvantage. Get to that next level of information. Information that helps you make proactive, informed decisions. Information that confirms your strategic plan is working or suggests that adjustments need to be made. Information that helps you run your company or operation.