Why data literacy is key to understanding your business

From actuarial tables to accounting, businesses have relied on data from the first days of commerce. And yet, today, they have access to an unimaginably vast landscape of data points that many say are transforming their very operation.

The question is, then: when people say ‘the data is the business’, are they referring to the user of sophisticated analytics or just making the simpler statement that businesses need to be able to access their data?

“I think it’s a bit of both,” said Muhammad Khan, senior cloud architect, TEKenable. “Certain businesses can take the data they are collecting and make use of it, but others are not able to.”

Khan said the issue for many businesses was not that they found themselves unable to collect data, but rather that they found it hard to make it useful due to processes that obscured its value.

“Usually, the problem is that it is in data silos. If businesses realise they can use this data and synthesise it, they can use it to drive decision-making. But they may not realise that.”

Indeed, today many internet giants, such as Google and Facebook, generate almost all of their revenue from data. Nonetheless, even more traditional businesses – ones based on sales or service provision – can also get valuable insights from the data that they hold.

“Traditional businesses like finance and manufacturing need to use data to make their operations more efficient, but a whole new kind of business has arisen where the idea is to collect and use data to sell other services. In the case of marketing, for example, certainly the data is the business,” Khan said.

Naturally, this has raised concerns about privacy: “The other side of the argument is that we should own it. If companies are creating digital twins of us in data centres, why don’t we own it, and why don’t you pay us?”

However, even leaving aside the internet sector’s feasting on data, a wide range of businesses have the ability to use the vast amounts of data that they produce to create more efficient and refined processes. And many already are.

“Banking and financial services are both right up there. Phama, healthcare and life sciences, they are next, and manufacturing is a leading sector, too, in terms of data use, especially now with IoT [internet of things],” Khan said.

However, another sector is a leader in using data to drive business. And, when you think about it, it is an obvious one: retail.

“Even ten or 15 years ago they had customer loyalty schemes, and now you have them designing these stores based on data: people can be monitored and tracked through a store. As a person stops into store, you get a heatmap, and the shop can do things like put advertisements there or premium shelves,” said Khan.

“When someone buys a special offer it can alert the CRM, which then can send an e-mail a day later offering something else, perhaps another discount. This was happening five years ago – and it happens in real time, it’s not a manual process,” he said.

While this may sound complicated for businesses to implement, it really depends on the maturity of their engagement with data and, indeed, technology in general.

Rather than dive in at the deep end, Khan said, businesses can take incremental steps to improve the use of data in their organisations.

“The answer is not to immediately hire a data scientist. A lot of businesses are not at the point where they need to get a machine learning model across their data. A lot are at a more basic stage where they are collecting data, but they have data islands with systems not talking to one another.”

The first step, he said, was to understand what data you had – something that would allow a business to, in effect, become data literate.

“Then you need to create a culture that is data-driven, and this is difficult as it requires a lot of collaboration across the business. This takes time,” he said.

After that, step three is to invest in the right tools and platforms. What they really need to do is pull all data into a common platform, called a data warehouse, using a harmonised data model.

Only after that does it make sense to think about hiring data scientists. However, Khan said, taking these steps will have already created a lot of value for any business having moved far beyond the typical functions and limitations of a spreadsheet.

“Typically people start with Excel, creating a new island. Most businesses are at this stage and they [the spreadsheets] become unwieldy. It is a very powerful calculator, but it creates all kinds of problems,” he said.