Typically, business activity is consolidated and evaluated at the end of every quarter or month and a rigorous post-mortem ensues. In between that period there is often a large patch of uncertainty.
Monthly cycles ensure that all businesses are synchronised and settlements can be in tandem. Daily accounting cycles, on the other hand, require the discipline of banks or the manpower of corporations.
However, in this day and age, there is no excuse to not have better business analytics. Point of Sales systems which can be seen at cash registers of larger stores such as Makro and Chase, automatically tally up the day’s totals and generate inventory reports or even alerts for items that are low in inventory.
Similarly, attendance software at most companies provides automatic tracking of hours put in by employees.
This ‘data collecting’ process is relatively easy to solve, albeit paper culture is still widespread in Pakistan which lends itself to corruption of records themselves as well as the authorities manipulating files. This happened in the fake degrees debacle recently and is a regular occurrence in land dispute cases.
Analytics and forecasting
Analytics and forecasting crunch data on a continual basis. The utopia of business analytics is real-time reporting, something terribly difficult to pull off but companies like Microsoft have been known to monitor sales of their XBox consoles by the minute and tweaked their supply and marketing strategies within a day of launch.
Businesses that operate solely online such as Amazon also have the huge benefit of closely monitoring and forecasting consumer demand. For example, most advanced analytics software allows segmentation of the busiest hour of the day, busiest day of the week and expected demand based on sales on the same date in previous years.
But that’s just skimming the surface. More advanced analytics generate automatic alerts or in the case of Amazon, automatically change product placements on their main website.
Powerful analytics provide some amazing capabilities for businesses such as ‘A/B Testing’. This is the process where a business may make a minor change and then observe the effects of that modification to decide if the change was fruitful.
A store like Makro may put up discounted confectioneries at check-out counters in one store on any given day and compare performance of the store against an outlet where no changes were introduced. Using analytics software, a retail chain can make hundreds of similar changes in a month and determine the success of products with accuracy. Purely software companies like Google go so far as to running all changes to their homepage through an A/B test and vetting out any change that does not yield positive results.
While this is only the tip of the iceberg, business analytics technology has evolved considerably to incorporate real-time reporting, statistical tools and reporting. There is plenty of room to improve with the right set of tools.
Published in The Express Tribune, August 9th, 2010.