The use of data within businesses in order to gain a competitive advantage is becoming more and more prevalent. Whether it’s used to get the best from employees, understand the market, or evaluate supply chains, it is becoming increasingly vital to business success.
For some organisations, data is their lifeblood: think about the likes of Google and Facebook, who rely on it entirely for their business models. For many other businesses, only small amounts of data have been dabbled with over the years, for marketing purposes or monitoring customer behaviours. But in recent years, the use of data to drive organisations forward has become more widespread.
In a 2019 survey conducted by Deloitte, 49% of respondents said that analytics help them to make better decisions, 16% said that it better enables key strategic initiatives, and 10% said it helps them to improve their relationships with customers and business partners alike.
Despite this, a recent YouGov poll conducted by UK law firm Mills & Reeve found that over 50% of business owners said that they either don’t know what to do with the data they have or that they don’t have data available to them at all. These organisations are at risk of being left behind.
Mills & Reeve’s Ruth Andrew, a Commercial Contracts Lawyer and David Hall, a Digital Technology and Data Lawyer, outline the ways in which business leaders can start to look at utilising data and drive their businesses forward to improve business efficacy:
One small step for you, one giant leap for your business
One of the first steps you can make towards building a strong data strategy is establishing exactly what it is that you want to gather, why you want it, how you want to use it and also, what data you have access to (whether on your own systems or from others). Chances are your organisation has a lot of potential data sources that are currently not being utilised. For example, what do the contracts you have with your suppliers say about the data and reports you are to receive? What data is being gathered from (or about) customers signing up to your mailing lists?
Laying the groundwork early and establishing a clear data strategy is key. Consider how the data you are looking to collect might boost your business performance, and what further processes or contract agreements you may want to put in place to ensure you’re collecting data consistently and wherever possible.
Mind the capacity gap
The reason many businesses don’t utilise data, or seek to gather it, is due to a capability gap. This could either be that they don’t believe they have the necessary data-crunching skills, or they don’t have the time or an identified need to invest in it.
A recent report by Accenture highlighted that data alone can’t unlock trapped value, but that a company must have the right people in place in order to turn data into a business advantage. “A company must forge a data-driven culture. That means having the executive sponsorship, talent, and resources necessary to collect, analyse, and make decisions based on vast amounts of new data daily.”
Businesses should look to start small, aiming to exploit one aspect particularly well to make an improvement to a specific area of the business. Alternatively, leaders can look at sourcing a third-party to help with everything from the sourcing of data to data crunching and management.
Capability issues are one potential disruption, but not having the right IT in place can also cause setbacks. If your existing IT facilities are holding you back from investing in modern software applications and services that can provide your business with management information, put in place your plan to replace those facilities.
Being proactive in how you manage contracts and your data is vital. You should consider your long-term business goals and objectives, and work backwards to determine how you can obtain the data that will help you to meet them. For example, if your goal is to reduce your carbon footprint, what data can you get from your suppliers (and contractually oblige them to provide) to evaluate current purchasing decisions? It’s this information that can help you to make more informed decisions and start to make a positive business impact.
Data can also be used to manage the performance of a contract. If a supplier is late in delivery it would be helpful if leaders and managers could see where they are in the delivery process, so they can plan accordingly, rather than being left in the dark and being reactive instead of proactive. If you are going to ask suppliers to provide real time data, think about your contract terms and how you position them to get the best out of the relationship and work collaboratively – no supplier will want to provide data on delivery delays if their contract is full of hair-trigger liability clauses. Check to confirm that it is actually lawful and practicable for you or your supplier to collect, share and leverage the data that you want to use, and to use it for your intended purposes.
Contracts can be long and tedious, and help at this initial stage may be a good option.
A step back for two leaps forward
The reason many businesses put off investment in data is that it costs, at least in the short term. In the long-term, however, if you delay investing in your business, the cost could be at your expense as you fall behind competitors. Equally, it’s important not to rush into collecting and using data and new IT. Take time to identify your business objectives, needs and priorities; to work out how data can help you achieve and meet those more effectively; and to work out the minimum data that you need for that. And always treat data cleanliness and accuracy as a priority: dirty or inaccurate data is worthless. You will need to plan for cleanliness and accuracy at each stage: data input, regular or procedural review, and occasional planned spot-test and audit.
There is currently a big gap in terms of data utility, which also poses a massive opportunity for UK businesses. – If you make data a priority within your business, you will start to reap the benefits and soar ahead of your competition.
It’s no secret, we are becoming a data-driven world. Utilising what is available to your business is of the utmost importance. We recommend starting today.
Building Resilience is a campaign by UK law firm Mills & Reeve to explore how organisations interact with suppliers, customers and the wider world and what opportunities this can create.