And Why Are We Capturing All These Data?
Data pervade businesses in every industry -- some more than others, to be sure, but whether you're in financial services or hi-tech manufacturing, data is increasingly the lifeblood of decision-making. That raises an important question: why are we collecting all those data? What's the real motivation behind data capture?
The most commonly issued response is something like, "well, we capture data so we can do the analysis, make better decisions, and compete more effectively in the marketplace." Vijay Mehrotra, Professor of Decision Science at San Francisco State University and former software executive, would beg to differ. Mehrotra says the "better decision-making" motivation is a good answer, but it leaves out the number one reason data gets captured: to keep track of money changing hands.
That's not to say that companies never capture data strictly for analysis and decision-making, but it's not as urgent or critical as capturing transaction data, where the units are money and the data are revenues and expenses. And the reason that capturing transaction data is a business imperative, Mehrotra says, is because companies can't execute their relationships without knowing where the money is going. Consider banks -- they were big early investors information systems. Why? Because money is flying around all over the place, and they wouldn't have any customers at all if they didn't account for every penny.
Meanwhile, companies can carry on with business without collecting data on internal processes -- data that can be used to learn how to streamline those internal operations. So even though capturing and analyzing internal process data can reduce cost and improve service, the urgency isn't there. The upside is that as data acquisition and storage continue to get cheaper, more companies will be able to collect data for the sole purpose of doing analysis and improving decisions.
In the end, it's important to understand the motivation behind collecting different types of data in order to avoid senseless acquisition, useless analyses and misinformed decisions. On the flip side, when data is captured and analyzed appropriately, the improvement in decision-making can bring your company to the next level.