Data Detox: The Importance of Cleaning Your Data

May 26, 2016
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Imagine enjoying years of everything going your way.  You land a great job, you have an amazing family and friends, and you live in your dream home in your dream city.  In fact, the only real problem that you have is finding the time to fit everything and everyone into your busy lifestyle.  But, rather than sacrifice your dedication to your job, or time with your spouse and children, you instead forget to focus on yourself.  Rather than engaging in regular fitness and eating healthy, you have evolved a sedentary life as a desk jockey, and your idea of a healthy meal has been to forego the supersize option.

Then, one day, you look at yourself in the mirror and realize that while everything around you seemed to be going perfectly, your lack of health has caught up to you.  Your family continues to grow, but you can’t keep up with them to the point that you decide you need to take action.  So finally, you enter detox mode:  you start to eat healthy and you join a gym and begin to work hard on yourself.  Three months later, you can’t even imagine what made you get to that point in the first place.  You’re more fit, you feel better, and you have the energy to keep up with the rest of your life.

For many businesses, this describes exactly the state their data storage and analytics functions are in.  When the business was small, a few Excel spreadsheets or even a notebook and pen were though to track the business and take it to the next level.  However, the business continued to grow and eventually you could no longer keep up.   More and more data began to pour in and your one page spreadsheet became a database (or, even worse, many Excel spreadsheets that you refer to as a database!).  And your database became a data warehouse.  But you don’t know where anything is or how it all ties together.

Imagine I were to ask you the following question right now:  What was your revenue by product/service for each month this year, and how many of each product/service did you sell?  You would be amazed how many businesses I come across that cannot answer this simple and important question.

How can you run your business without even knowing if you are making money?  Luckily, there are some steps you can take to put yourself on the path to greater knowledge of your business.

 

1) Assess your data and take stock of what information you have available

As your business grows, data silos emerge.  Sales has its own database with transaction data, and they are told to “sell sell sell” with only a view of revenue and sales targets, and not margin or EBIDTA.  Supply Chain has a list of shipments by waybill that it cannot tie to sales so they manage themselves solely by the truckload.  HR manages payroll, but has no idea what each employee produces.  The manufacturing floor keeps making more and more low margin product, but has no idea that they are under-producing the highest margin products (hint, you should be utilizing the 80/20 Principal).

Every department holds key information that would be invaluable to everyone else around them.  Interview stakeholders in each area to find out what they need, as well as what they can offer.  Find out what software they use, what reports they create, and where the data comes from to create those reports.  Once you know what information your organization has, you can determine how you can use it to improve your business.

 

2) Clean your data!

What good is your data if it doesn’t make sense, is difficult to navigate, or is inconsistent to the point that you can’t trust it?  You need a resource who can learn the data inside and out and whip it into shape.  Are you consistently seeing sales transactions with negative revenue?  You need to know exactly when that represents a product return, and when it represents a more glaring issue.  Do you have a store that is sometimes referred to as “Times Square”, while other times it is “TSQ”?  You have a data consistency issue that needs to be addressed.

This may also be a good time to hire a data governance expert.  Think of this as your data project manager whose sole purpose is to install guard rails around your information to enforce data integrity.

 

3) Create a system going forward.

A massive data cleanse is all for naught if you spend months completing it, only to go back to your old ways.  Document the steps that you took to clean the data and put systems in place (preferably as automated as possible) to continue keeping the data clean going forward.

 

If you complete these three steps, then I promise you will reap the rewards by giving your team the tools to discover vast opportunities for margin improvement.

Once the data has been cleansed, you can provide your team with dashboards, tools, and insights that can be used to find that next “eureka” moment to launch your business forward.