3 Dangerous Delusions in Data Analysis

  • Ed Thompson, CTO
  • January 8, 2014

data-analysis-3-dangerous-delusionsData analysis is hot. Suddenly, businesses have woken up to value of cutting-edge sales analytics and Business Intelligence. But sadly, many of the businesses which are currently dipping a toe into the world of business analytics are destined to be disappointed.

Why? Take a look, and it’s usually because they’re harbouring three very dangerous delusions about exactly what they’re doing—and how best to go about it.

What sort of delusions? Well, ask yourself if any of these scenarios sound familiar.

Delusion#1: Data manipulation equals data analysis

Jenny has set herself a challenge. Today, she’s going to analyse her company’s profit margins in each of the European countries in which it trades. Tomorrow is the day of the monthly sales meeting, and she’s sure the figures will arouse interest.

So what happens? Well, from 8:30pm until 4:55pm, she manually builds an enormous spreadsheet. And then, from 4:55pm until 5:00pm, she actually looks at the results.

In short, she didn’t spend the day analysing the margin figures at all. She spent the day on low-level data manipulation, and only five minutes on the valuable part of the job—actually analysing the data.

True, she’d been busy all day. But the net outcome from all that work was very limited: minimal insight, and consequently, minimal eventual action.

An analytics success, or an analytics failure? You be the judge.

Delusion#2: My spreadsheet is better than your spreadsheet

Meanwhile, Mike and Dave have been busy analysing sales revenue figures. Dave is very pleased with the spreadsheet that he’s built. And his colleague Mike is also very pleased with the spreadsheet that he has built. Flushed with success, they head off to the monthly sales meeting.

Dave’s spreadsheet led him inexorably to a conclusion about where the opportunities are, and what needs fixing. It’s a message he’s keen to share. The only problem: Mike’s spreadsheet has led Mike to a very different conclusion.

The result: argument and debate—but not about the opportunities on offer. Instead, time is wasted discussing why the spreadsheets tell different stories. And in terms of pursuing those opportunities, not much happens.

An analytics success, or an analytics failure? You be the judge.

Delusion#3: The answers we need must be in these reports

ERP systems generate countless standard reports. Bolt-on supplementary systems—CRM, finite scheduling, or advanced forecasting, say—generate countless more.

And then there’s all those special reports created by the IT department.

Requested by individuals over the years, and lovingly maintained by the IT department, they slice and dice data every conceivable way. But that doesn’t help Sally.

Because most of those reports are rarely, if ever, used. So when Sally needs a report for a particular purpose, she has no idea if an existing report will meet the need or not. Consequently, Sally often asks for a new report to be created—consuming expensive IT resource—because it’s quicker.

It’s a tale that’s all too common: voluminous reports clouding the business’s understanding of what is going on, rather than aiding it.

Ignored by some people, used selectively by others, and misunderstood by yet more people, what you often find is that the reports which are actually used to run the business are manually compiled from several individual reports—a figure from this report, a statistic from that report, and so on.

But, based on reports that have been run at different times—and across different sources—the result, yet again, is conflict and confusion about the message, not what should be done.

An analytics success, or an analytics failure? You be the judge.

Right tool, right job

Sounds familiar? Of course it does. Such scenarios play out in businesses all over the world.

But what to do about it? At the very least, on environmental and cost-cutting grounds, there’s an argument for dramatically curtailing the publication and distribution of reports. And raising the bar higher in terms of the justification needed to commission yet another report from the IT department.

That won’t help the business meet its reporting and analytics requirements, of course.

But neither will an obstinate reluctance to face up to reality. If tools aren’t fit for purpose, they won’t perform the job.

And at Matillion, our goal is to provide cost-effective, quickly-implemented, Cloud-based analytics and reporting tools that will perform the job.

To find out more about which Business Intelligence tool is most suited to your business download our free e-book below.