Even though analytics is on the rise in large companies, small companies are not taking advantage of it due to a lack of technical expertise and capital investment.
Larger organisations have begun to reap the benefits of analytics, but small and medium businesses, especially in Southeast Asian countries like Malaysia and Singapore, have lagged.
Speaking to Business Today on the need for businesses to use analytics from inception to growth expectations, Rakesh Jayaprakash, Product Manager for Analytics Plus at ManageEngine says another big problem in the use of analytics is the speed of adoption by some businesses.
“The big problem we see today is not the lack of understanding of the benefits of analytics, but the speed of adoption by business.
“The problem is fuelled by the lack of sufficient initial capital investment and technical expertise. However, this is changing as more businesses realise the importance of deploying an analytics system early and recognise, from reviewing success stories from the west, the benefits they can obtain,” he says in the email interview.
The majority of the costs associated with implementing data analytics comes from procuring analytics tools and training/hiring personnel who can manage them.
Though this will be seen as a huge capital expense, if implemented and put to use in the right way, organizations can realise the return on their investment fairly quick.
“It is quite hard to put an exact number on how much a company should invest in analytics, however, a good guideline will be setting aside 5%-10% of the IT budget for the initial setup and implementation in the first year,” he says.
While establishing a data system and managing it requires some level of expertise, running analytics for day-to-day decision-making does not need such expertise.
Businesses only need to invest in training a handful of their staff in data management and analytics to reduce the time required to obtain actionable insights.
He says organisations that have adopted a data-driven culture use data analytics at the forefront to make strategic decisions.
They do not limit themselves to using data in business decisions, but also apply it to intra-organisational decisions that help improve operational efficiencies across departments.
“Organisations that are slow to comprehend these trends risk falling behind their competition,” he says.
Nevertheless, data analytics is important for big or small companies because it helps them optimize their performances and make better decisions.
The use of analytics will also help a company to make better business decisions and analyse customer trends and satisfaction.
This is how new and existing companies can develop new, innovative products that could capture a wider market.
Putting in place expansion strategies, or planning a marketing campaign to boost sales, requires a thorough scenario analysis.
In analytics terms, this is called a “what–if” analysis, says Rakesh. “It helps entrepreneurs better prepare for both positive and negative scenarios by considering all the factors that correlate with the outcome.”
With analytics, success and failure can be viewed objectively. A scenario analysis, for example, can help businesses visualise the financial impact of a campaign that doesn’t perform as expected.
In this way, businesses can fine-tune their campaigns before going live. Startups and aspiring entrepreneurs should adopt a similar approach, he says.