Three Data and Analytics pitfalls and how to avoid them

Why too many analytics solutions don’t truly support business-critical decision-making and can sometimes limit trust in your organization?

Business intelligence solutions are increasingly becoming an everyday part of the corporate life, you probably recognize the impressively designed reporting dashboards created to give managers a view of a number of KPIs that enable fact-based decisions to be made with the help of nearly real time data. Unfortunately, the beautiful layout is too often partly window dressing, and problems start to arise when one looks deeper into the data presented.

After seeing how a number of business intelligence solutions play out in action, the majority of issues with them have stemmed from one or more of the three pitfalls that I strongly encourage everyone to avoid.

kpi1

1. Take the quality of the data for granted

The first of the pitfalls sounds like it should not be a problem for any company making data-backed decisions – but unfortunately it is just too easily assumed to be in order. In short, the quality of data is often taken for granted. If your input data is inadequate and insufficient measures have been taken to secure its quality, the output will not be any better than the input. If your organization cannot rely on the data, it not only makes fact-based decision-making very demanding and time-consuming, but also decreases the valuable trust in your organization.

2. The more KPIs, the better

The second pitfall, is the assumption that “the more KPIs you have, the better decisions you make”. Focusing on too many KPIs can easily lead to a situation where one’s focus on things that really matter is put at risk. KPI, i.e. the Key Performance Indicator, so, out of the long list of potential Performance Indicators, you should have only a limited number of Key Performance Indicators that are selected specifically for your business and supports monitoring of the progress of the business strategic performance. Thorough assessment and evaluation after which selecting the Key performance indicators you avoid losing focus.

3. Use KPIs that don’t suit your business

Finally, probably the grossest pitfall is the lack of sufficient care in defining the calculation logic of the KPI, which most often results from a lack of true understanding of the business. If your business intelligence partner shines in the IT part, but takes shortcuts in understanding your business logic, you will most probably end up in a mess. KPIs lacking substance are worthless, and can even have severe consequences by prompting wrong decisions.

Trust your analytics and shine

Being able to trust in your analytics is one of the hot topics in the area of data and analytics. Why should you settle for being in the same position as 84 % of CEOs that have concerns about the quality of the data on which they base their decisions?

Presenting business reports in fancy dashboards for managers doesn’t make them trustworthy. Instead, trust stands for a larger set of KPIs and their relevance for your business. If you go wrong in your analytics, trust towards the whole organization can suffer. Don’t let it happen.

Niko Hollender is a project manager in KPMG’s Global Strategy Group committed to creating value for clients in the areas of strategy, operations and M&A. He has over six years of working experience in international management consulting. When off work, Niko enjoys going to the gym and training for his next marathon.