Data Driven Decisions

A company which wants to start taking advantage of existing and latent information within itself has a long way to go. It is, unfortunately, necessary to wade through a swamp of concepts of buzz words such as “Business Intelligence,” “Data Science,” “Big Data,” and so on. Management may want to build “Data Warehouses” and store more of the data which is produced in the organization. But then we wake up from the dream.

All of this data locked into various databases just cost money if no one touches it. The database administrators might not let people interact with it because the database is not capable of executing the required queries. The lucky ones who obtain data can deliver information about the data itself, answering questions like “how many?”, “how often?” and “where?”. Using tools from the Business Intelligence domain charts and tables are shown as reports where the user has to gain insights by drilling through the heaps and dimensions of information. This is the lowest level of refinement.

So, when embarking the endeavor to improve the business value of the reports using analysis, companies should not start looking at how existing data could be utilized and how to collect new data and how to store data. These issues should, of course, be addressed later on, but this is not the first priority.

Think backward instead. Start thinking about what the organization needs to know to work better. This is up to the domain-experts of the company to find out. They should be aware of some low-hanging fruits already. Then continue by sketching the process backward. If the management of the company needs to know something to be able to make better actions, what is required to produce that information? Is the data required available or can it be created from other data? And so on. Think about what is already there (an inventory might be needed), what new metrics are needed and are they measurable, is the development of new measurement methodologies required, is a given measurement method returning what it is expected to?

There are several technical challenges on the way which could involve the “four V:s” of Big Data: volume (how much?), velocity (how often?), veracity (can the data be trusted?) and variety (is the data heterogeneous?). There are also soft challenges which need to be solved like tribalism in the organization, the attitude of people towards change and tearing down walls of organizational data silos.

For a data-driven system to shine, it needs to be able to deliver insights which represent deviations outside the normal range of operation. Based on the insights the system should provide a set of recommended actions to improve the situations. The recommendations are presented together with an impact analysis if the action would be applied. This way, decisions are documented along with the facts available at the moment of decision.

Basing decisions on data is nothing new, but new technology helps to make data available sooner than previously. Having an expert system recommending actions and predicting the outcome can be a real time and money saver. Making the decision making fully automated as well is, however, an entirely different beast. Humans like being in control and it very hard to verify the correctness of wholly automated decision systems. Humans can help introducing some suspicion and common sense when recommendations do not make sense. Extra scrutiny can then be called upon to make sure there are no strange artifacts in the underlying data.

Data-driven decisions will most certainly gain traction in the future as increasingly more complex decisions can be handled. Technology is seldom a stopper. The number crunching can be solver. Company culture and politics is the primary stopper and must not be forgotten when setting up a new project.

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