Accounting on Us
After setting the KPIs and Metrics and reviewing the availability of data, look at the quality of your data.
Analytics for the New Year
Kevin Bach, CPA, CVA
As the New Year rapidly approaches, now is a great time to look at your company’s data to help determine a path forward. The goal of using your company’s data analytics is to assist management with identifying a question or problem and using your data (financial and non-financial) to determine an answer or a solution.
Step 1 – KPIs/Metrics
Your first step should be focusing on key performance indicators (KPIs) and metrics your company is currently using. This evaluation should focus on whether the KPIs and metrics are still relevant to the company’s question or problem. If they are still relevant, then determine if any goals that rely on these KPIs and metrics are still obtainable and realistic given current market conditions for your organization and the economy at large. Similar to setting an annual budget, the goals which are based on KPIs and metrics should be reviewed and updated annually.
Also look at your analytics platform to see if there are any new or modified questions or problems your data can help you with. In addition, it would be worth a meeting with key management members to discuss and review the KPIs and Metrics your company is officially tracking. Often some managers are already tracking KPIs and Metrics that can be shared, should be modified for usage, or scrapped as its not relevant to any of your missions or goals.
Step 2 – Data Availability
After reviewing KPIs and Metrics, review the data points needed to calculate these KPIs and Metrics to make sure your system can deliver the data you’re looking for. In addition, a review should be done to determine if any of these data points could be obtained by independent sources. Perhaps the same data could be found in a national government database such as the Federal Reserve Bank of St. Louis, local government databases such as city or county permits/inspections/etc. or even available from other sources such as marketing data within Google or Yahoo, website traffic with a company’s webhost, or weather data through the National Weather Service. The goal in data availability is to find the data points that can be obtained electronically and from third party sources that are independent and not editable.
Step 3 – Data Quality
After setting the KPIs and Metrics and reviewing the availability of data, look at the quality of your data. Are there any errors in the data (such as incorrect customer address, incorrect product SKUs, etc.)? Is the data being entered consistently (such as a 2-digit year vs a 4-digit year)? Is there duplicate data? Are there null or blank values in the data?
In addition, review your data for outliers and anomalies to determine if it is accurate or if the data might represent errors or lack of quality. Also look at any relationship setups to ensure that there has been no change in the source data that would impact the relationships implemented (an example would be if customer numbers were updated on invoices but not updated in a master customer file).
Step 4 – Future Planning
Now that you’ve ensured data quality, the next step would be to look at the analytic tools you’re using. Are the tools able to extract/transform/load (“ETL”) the data points you’re looking for? Is the ETL process manual or can it be automated with current or other tools? Are the analytic tools providing all the right visualization or dashboards for management to operate and make key decisions? Are the tools setup for cloud integration and are they accessible to management inside and outside of the company, based on internal security requirements of the company? Taking it a further step would be considering artificial intelligence or predictive analytic models to help management make business decisions based on future predictions.
These are just some of the steps that a company should look at as 2021 is upon us. If you have any questions about your current data analytics setup or would like to create or review your analytics collection, please contact your Henry+Horne advisor.