Data & Analytics as an integral part of today’s business

Are the D&A capabilities of Finnish companies sufficient? I claim they are far from it, and the “Building Trust in Analytics” survey commissioned by KPMG may support this statement.  From a strategic and efficiency-enhancing perspective, it may be worthwhile to have a look at what D&A has to offer your company.

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The Building Trust in Analytics survey was carried out in 10 countries on all continents, and the 2165 respondents were all directors and C-level executives fully or partly responsible for data & analytics. Although the majority of companies interviewed for the survey deem D&A important for their businesses, only 34% are confident in the business operations insights generated by using D&A. Furthermore, just 21% trust the analysis/modelling they conduct. I find these numbers somewhat incomprehensible, and I’m left wondering why the trust in D&A is so low, regardless of its widely recognized significance. One possible reason is inadequate competence, combined with outdated and unsuitable tools.

D&A provides a myriad of possibilities

I’ve personally participated in projects focusing on cost and process efficiency, where D&A has been utilized and even heavily relied on. Even though I was familiar with D&A prior to joining KPMG, I’ve been astonished by the vastness of its application possibilities, as it can be applied within virtually any activity where data is available.  The only limits are essentially your own creativity and skills and the features of the software you’re using. More often than not, the finiteness of the software isn’t an issue.

So why not invest in D&A?

As the survey presented above does not include Finnish companies, it isn’t an indication of the D&A capabilities in them. Be that as it may, I know from personal experience that the use of a few Excel spreadsheets is still the most advanced form of “D&A” in many Finnish companies. Obviously I’m generalizing, but the truth is that I’m yet to be blown away by the D&A skills of a Finnish company!

Upgrading your D&A is surprisingly easy

Taking your D&A to the next level, so to speak, can be anything but cumbersome, and not quite the nuisance you might think. Licenses for extract, transform & load tools aren’t all that expensive, and some ETL and business intelligence software is even available for free. Using them is generally not all that tricky, and with just a bit of practice and the will to learn, you can make impressive visuals and save time with smart commands in your ETL software.

I’m very much inclined to recommend the use of D&A. There are clear efficiency-related upsides, as well as numerous other benefits, and the use of D&A in companies will most likely increase exponentially in the future. So, why not invest in D&A in the form of proper tools and skilled employees? We’ll be happy to help you, and you’ll most likely thank yourself for it later.

 


I am Erik Mustonen, a member of the KPMG Global Strategy Group. Ever since I was little, I’ve been interested in numbers and calculus. D&A is, in a way, another outlet for my passion for numeric analysis, and an exciting means to explore and learn new things. At KPMG I’ve been fortunate to be involved in D&A-related assignments. KPMG has clearly made progress within the field and a strong D&A community has developed here, which I’m happy to be part of.

Industrial B2B companies need to join the Data Race

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I’ve noticed that Finnish companies, especially in the industrial sector, have only scratched the surface in utilizing the huge amount of data and information gathered from their manufacturing and service processes. The problem in most companies is that the potential of the masses of data is diluted to a small stream instead of a gushing waterfall – from both the business and Data & Analytics perspectives.

Digitalization, Data & Analytics, Big Data, leadership and management by information – whatever we choose to call it – is an inevitable evolution. It’s highly likely that you are dealing with competitors who have already passed you – or who are about to pass you with the boost that comes from harnessing information in a way your company has not.

From data underutilization to process optimization

Especially in traditional settings such as manufacturing – unit, batch or process – there is much to gain in taking the next step to utilize data better than your competitors. Chances are you are already gathering enough data – there just hasn’t been a good way to clean it, combine it and analyze it. With current technology and the right people, making your data truly work for your benefit may require smaller investments than you think.

Of course, much time and effort has been invested to create a basis for data utilization, but in my view these investments have increased the amount of information available, rather than improving how it can be used for business benefit. Especially in manufacturing, where data is already abundant, there is still untapped potential to increase throughput, optimize process bottlenecks, increase product mix profitability or reduce machinery and process downtime – among countless other uses.

Harness previously unavailable computing power

We’ve used an analytical, data-driven approach for decades. But as good as engineers are in creating analyses from different data sources, the human mind’s capacities are simply far too limited to fully understand the underlying causalities, relations and consequences in big data sets. However, currently available algorithms and analysis methodologies can process vast amounts of information from dozens of sources to highlight the concrete sources of business benefits, helping businesses to achieve growth and control costs.

Take action now!

The importance of Data & Analytics will continue to grow, but instead of joining the Information Race just for the sake of sounding “forward-thinking”, the business objectives must always be clear in mind. Check whether you or your company have done the basics:

  1. Consider and clarify your business objectives.
  2. Understand what data is available, what data is currently utilized, and where the gaps are.
  3. Create an agile plan to systematically grow your analytics capabilities, in-house or outsourced.
  4. Start pilots in specific processes to find the right approach and increase your efforts in a controlled manner.
  5. Implement changes that will arise as you understand your business better.
  6. Return to step 1.

Remember, don’t wait too long to accept the inevitable. Your competitors are already in the race, and so should you be.

Ville Huovinen is a Manager at KPMG Global Strategy Group. He has worked as a Strategy and Operations Advisor with Finnish and multinational companies for close to 10 years in various development programmes, including improving supply chain performance, designing and implementing management & performance systems, as well as building and running Program Management Offices. Outside office hours Ville enjoys cooking, cycling and travelling.

Trust issues with your Data and Analytics

Just 34% say they have a high level of confidence in their operational Data and Analytics (D&A), according to a recent KPMG study.

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I can’t say I’m surprised about the huge trust gap. Having worked on many operating strategy and cost related projects, I have experienced the challenge of collecting reliable data over and over again. I have also designed and built several D&A solutions, and battled to ensure data quality, while reducing complexity and increasing transparency.
During my career, I have come to learn a few critical things that, when done right, help create D&A that business leaders will use and trust.

1. Find the right person for the job

Dealing with databases and Business Intelligence tools requires a different language and mindset. All too often, a lot of time and effort is wasted on building unnecessarily complex solutions and reports, just because business and IT people don’t understand each other. Poor communication in the design phase places trust at risk.
Building successful D&A, requires someone who can stand in the middle ground between business and IT, and define requirements in ways that allow for implementable and easily understandable technical solutions. I find that the best results are achieved when companies involve users with the right skills and analytical curiosity. Every organization has these persons – so make sure you pick the right one to lead and drive development of your D&A initiatives.

2. Invest time in training

Creating trust takes time, and developing D&A is no different. If people do not understand where data is extracted and how KPIs are calculated, they have a hard time trusting the figures. If you are fortunate enough to have included the users in design and development, you are halfway to success. Just don’t forget to spend time communicating and teaching the entire user base, in order to convince the other half. Also make sure that you make proper provision for training in your budget. Otherwise, the investment will fail to deliver the desired benefits.

3. Let analytics build trust in the data

D&A tools nowadays allow users to go beyond static dashboards and explore the underlying data. Enabling such analytics is a very powerful way to build trust. Many operational KPIs, such as utilization rate, cost efficiency and safety indicators, are ratios. Unless users can analyse the underlying components, it’s difficult for them to be sure of the data quality, let alone draw the right conclusions. I am an advocate of self-service analytics tools, as I have seen their ability to win over the trust of employees.

4. Ensure effective maintenance

Nothing breaks trust faster than inaccurate data. Seeing your production yield at an unrealistic level of 250% or a safety indicator showing 0 events, just after you read about an injury on the company intranet, will keep users from coming back.

Make sure you establish clear responsibilities for the data and clear lines of support when things go wrong or need modification. Too often, I have seen users switch back to old Excel reporting, just because their change requests have not been answered promptly. As business and operating models undergo rapid change, make sure that your D&A is not left behind. It takes a lot to win confidence, but little to lose it.

The same study that revealed the huge trust gap, also discovered that the majority of businesses see their competitive advantage as being underpinned by D&A. Regardless of whether your particular concern is operational efficiency, or understanding your customer, or managing risk and compliance, it is increasingly important to build D&A capabilities. Personally, I predict successful outcomes in all cases where sufficient resources and time, plus the right skills, are allowed to focus on delivering well-thought-out and tested solutions.

PS. Read the full report here.

Oskar Palva is a Senior Manager at KPMG Global Strategy Group. He has worked as an Advisor for Finnish and multinational companies for close to 10 years, mainly in industrial manufacturing and the chemicals sector. Oskar has experience in growth and innovation, operating strategy, performance improvement and data and analytics. Outside of the office, he enjoys a game of tennis, a good meal and the countryside.

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.

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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.