Many businesses now amass vast amounts of data simply by trading in the modern world. This has led to a shift in business attitudes, with data analysis being a crucial part of the decision making process.
As data has become more central to business operations, it has also become more readily accessible within organisations. Whether it is customer trends or financial reports, a lot more employees now have the ability to access the data they deem relevant. Is this a good or bad thing? Should anyone other than qualified specialists have access to bespoke reports?
There are many advantages to being better informed. It helps your employees to make better decisions based on factual data. Having direct access to the data can speed up the decision making process. They gain a better insight into the current operations of your business in a more specific and timely manner.
It increases efficiency by reducing the amount of time they need to wait for a report, and takes the pressure off the accounting department that would usually have to deal with the requests.
The benefits go on:
- Simplified reports that are customised to only contain the data required
- On the spot analysis to test assumptions and confirm theories
- A greater understanding of the businesses position amongst your workforce
These benefits combine to provide a business with a huge advantage. They become more efficient, more informed, more profitable. Although this all sounds like a great idea, are there any pitfalls or dangers businesses should be aware of?
Some of the positives can also be negatives if the use of the data isn’t implemented properly, and your employees aren’t sufficiently fluent to interpret the data they are handling. Others may draw incorrect assumptions from self-penned visual guides.
Having the ability to create reports that are effectively a custom snapshot of more detailed information can lead to data being unintentionally misinterpreted. While access to this data speeds up the decision making process, the decision will only be good if the interpretation of the data is good.
Manually collating and transforming data can be seen as a key risk to the reliability of results. Furthermore, individuals bespoke solutions often lack consistency, especially in a broader organisational context.
The ability to create custom reports also opens up the possibility of someone intentionally manipulating the data to fit a particular requirement, or to misrepresent a situation.
People with access to the data must also know how to choose the right time to refer to it. Constantly and needlessly referring to data can be a waste of an employee’s time.
In summary the potential negatives include:
- The potential for misinterpretation or manipulation of data
- Too many options and over reliance could lead to less efficiency
- Key-person dependency risk
- Lack of organisational standards make broader comparisons difficult
- Bad information could lead to bad decisions
While these negatives are very real, none are stand alone problems.
The argument over whether the more traditional prescriptive analytics should replace proprietary, and often ad-hoc, analytics has been ongoing for decades. All of these potential negatives associated with self-service financial reporting are a direct consequence of bad implementation. Building a solid understanding of how different departments will use the reports will give you an insight into any potential problems they might encounter.
This allows you to build a self-service infrastructure that will reduce the likelihood of these negatives from the start. If self-service financial reporting is new to your organisation let your employees know of the potential negatives they could encounter. Encourage people to provide feedback and make suggestions in the early stages, and be flexible in your approach so you can quickly adjust your systems to compensate for other problems as they occur.
If you think your company might be susceptible to the misuse or misinterpretation of data, then why not chat to us about ways to avoid some of the pitfalls. We have many years experience in the financial sector, and we’re always happy to share our professional knowledge to save you from potentially costly mistakes. Call or e-mail us today.