The Role of Data Analytics in Value Creation
One of the biggest challenges faced by operating partners as part of their value creation process is being able to extract the data necessary to make the best decisions for increasing a company’s value.
While a business’s financials are usually carefully monitored, operational data is often tracked poorly, inconsistently, or in some cases, not at all. As a result, operating partners can have a hard time accessing the metrics they need in order to know which levers to pull.
In cases where companies do track KPIs, it’s often manually and sometimes on an ad hoc basis. In this scenario, port co employees are asked to enter various metrics into spreadsheets, which can lead to errors, inconsistency, bias, and lag time. Even when accurate, this data is not always easily available and can be difficult to sort or compare with other metrics.
But accurate and timely operational metrics are critical for value creation. It is these metrics, including data about human resources, marketing, sales, and more, that are the key to improving efficiency and value. If trends are negative—if profit is down, employee turnover is high, or client retention is low, for example—data can help you get to the root of the problem and fix it quickly. And when trends are positive, accurate data helps you optimize what’s already working.
Firms without easy access to operational metrics can address the issue with data analytics, specifically built around a mentally of automating:
Data collection
Data integration
Data visualization
Automated Data Collection, Integration, and Visualization for Accurate, Timely Insight
By automating data collection, companies can ensure that the information they need is both accurate and consistent. Automation also means information is timely; data can be collected as often as makes sense for the company’s needs for up-to-the-minute insights.
Once information is collected, data integration can combine information from different data systems into a single, unified source. Information that may have formerly been “siloed” by department or function and accessible to only one group of employees is now consolidated and available for operational analysis.
But the best data in the world doesn’t help much if people can’t understand it. Via data visualization, an interactive central dashboard gives even the most spreadsheet-averse user the ability to quickly see how various KPIs are tracking in relation to each other as well as to targets, objectives, and the industry overall.
Results: Smarter Decisions in Less Time
With all key metrics available in one place, data is more meaningful. Wins can be celebrated and problems reported quickly, and insights can be shared with outsiders without compromising company security. Thanks to automation, errors and inconsistencies among data sets are reduced, with the additional advantage that employees are freed up to focus on their jobs, rather than on collecting and entering information.
Additionally, because metrics are being collected regularly and made available immediately, companies are able to rely on hard data rather than educated guesses and respond quickly to new information. They’re also in a stronger position to identify areas for improvement, spot profitable opportunities, and identify trends, patterns, and outliers.
Two Case Studies: How Analytics Improved Business Performance
As a boutique analytics consultancy, our team at NuView sees firsthand how the process of collecting, integrating, and visualizing data can help in the value creation process.
In one instance, a consulting services business we worked with was pleased to see that its revenue was increasing—and not so pleased to see that its EBITDA was not. The analytics dashboard revealed that the increase in revenue relied on a proportional increase in contract services. With the knowledge that simply hiring more contract labor was unsustainable, the company was able to find other ways to increase profits with less expense.
In another example, a home appraisal company found that it was taking too long to complete individual projects. Thanks to a dashboard that monitored the time that each stage of the appraisal process took, they were able to figure out where in the funnel the logjams were occurring. Once they cleaned up and streamlined those areas, they increased their appraisal rate by 30% in just six weeks, allowing them to take on more clients.
Your Data = Your Success
For operating partners, data analytics are key to value creation. Armed with accurate, accessible information, they are empowered to make smart, data-based decisions that maximize operational efficiency, optimize the value of their portfolio companies, and give them the competitive edge they’re looking for.
Whether you need help pinpointing areas for improvement, developing KPIs, or using the latest integration technologies to make all your data available to users through an intelligent dashboard system, NuView Analytics has a service that is right for your needs.
