This weeks blog comes from Adair Simpson, the Director of EFM Scotland.
In a society that is consumed with the notion that more data is better, we are fast becoming a generation that is driven not by logic or tried and tested methodologies, but rather by popular movements and buzz words.
Companies are starting to use poor performance as a means to justify the need for Big Data when in actual fact they need to strip back the complexities of their reporting infrastructure to see what is really driving performance. Big Data is no substitute for poor internal controls that allow company profits to rise unexplainably in one quarter then drop through the floor the next, or allow a company to exhibit rapid top line growth, yet return a shrinking profit margin or even experience cash shortages.
I am not disputing the fact that there is a place for complex data sets that algorithms can help predict probable outcomes. But for the most part, this should be used to give yourself a competitive edge not to hide insufficient infrastructures, processes and management teams who cannot even interpret the most basic of data sets.
By piling data into an ill-prepared environment, what are you actually investing in?
In most cases: an expensive excuse that management teams will hide behind when it doesn’t answer your big question;
“Why is performance not improving?” You usually do not need big data to answer this question.
Without a firm handle on the basics, adding more data will add unnecessary complexities to business decision making, increasing the time taken and likelihood of making the correct decision. Keep it simple:
- Set expectation via a budget or forecast
- Identify what work you committed (i.e. won), what opportunities you’re aware of, and what is still to be won
- Identify a high-level plan as to where you think the new work will come from and how will you convert it
- Create running forecasts on:
- Gross Margin
- Identify profitability at a product/service/client/location level
- Review actual performance vs expectation and identify the root causes to any variance
- Adjust budget/forecast accordingly once root causes have been identified
This does not need to be expensive and can often be dealt with cost effectively by using an experienced part time or project finance professional.
If you are experiencing problems with any of the above, then feel free to contact me at:
Adair Simpson (Click here to see Adair`s profile)