Operational Analytics is the act of amalgamating data regarding how your company runs, how it interacts with other businesses and how its value chain and processes are done. Between companies and industries, operational analytics will differ in how data is processed, but essentially operational analytics will tell you how your business runs and how you could improve it with better planning and increased efficiency.
While our previous article which looked at marketing analytics focuses on the external environment, this article is about how you can improve your business from within and how this will transpire to improvements in your interactions with customers and businesses outside of your operations.
How do businesses benefit from Operational Analytics?
Operational analytics is key to your business in terms of driving efficiency. If you can streamline your company to deliver a service in a quicker, better and more efficient way, it is logical to say do it. But how do you know that a certain way is the right way and more importantly, how do you even know that your current strategy is inefficient when compared to another strategy if you do not even know that other strategies exist!
It is easy to say that you have been doing something wrong when it’s in hindsight or when someone else shows you the right or a better way to do it. Operational analytics is the tool that guides you to realizing better ways to run your business, and gives you that alternative option to help improve your business.
Leverage other partners for better efficiency
Operational analytics takes all the processes your company carries out across the entire value chain and mines this into producing solutions. These solutions can provide businesses with more effective solutions as they are based on previous, current and forecasted market data, and your business can then use these solutions to improve internally.
Internal improvements will reflect on its image externally as a company that is more efficient in producing goods will be held in higher regard by customers than a company that is producing identical products but not efficiently. This is because efficiency saves money, which means you can reduce your price for the same goods, thus making your business more competitive and increasing your profit margins.
For example, in the eCommerce industry, Lazada which is partially owned by Alibaba, appeared operationally sound in 2015. With operational analytics, they uncovered sources of efficiencies that could be utilized across the parent and daughter companies. Instead of taking care of the products and distributing them, Alibaba, which has a commanding stake in SingPost, sought to improve SingPost's infrastructure and build upon it.
Thus, instead of trying to keep everything in-house in Lazada, where it may have appeared to be more efficient to them individually, Alibaba made the decision using operational analytics to build upon the competencies of Singpost and ‘introduce’ the two companies to one another. This resulted in SingPost having a much larger and happier customer base and Lazada gaining a much-improved logistics network.
Operational analytics can give you the tools to understand your company better and help you make the big calls, such as outsourcing a major division or process of your company. If we apply insights gained from operational analytics to an SME, instead of you warehousing all your goods and shipping them yourself, you can outsource this to a logistics company, like Singpost or DHL for instance.
Use data to predict and react in a timely manner
Operational analytics can also tell you when is the right time to do this and can help your business with regards to predicting when demand for your products will increase. Real-time forecasting and predictive analytics fortify this judgement and help you understand your customers better. This enables you to allocate resources better and react to market demands in real-time to deal with scaling up or down due to fluctuations in the demand for your products. Being reactive is crucial in the highly competitive global market and also for businesses to improve customer satisfaction.
Traditional businesses using operational analytics can also be improved, again in terms of better managing workforces, but more importantly with regards to responding to customer expectations and demands as they happen and delivering enhanced customer experiences.
Better customer experience
Data mining is often paralyzing for traditional businesses, but when unlocked, those companies can deliver more tailored experiences for their customers. This is because as more information is known about their customers and efficiencies are realised in the operational journey, customers will receive better quality goods which are more tailored to their individual requirements and within a shorter time.
Service delivery is vitally important for traditional business as is cost, thus with operational analytics businesses can aim to improve both aspects simultaneously, whereas typically you would expect to sacrifice one for the other.
The Potential Pitfalls of Operational Analytics
Resistant to changes
The major difficulties with operational analytics is with regards to implementing it. When you have a system that has been in place for many years, and data is now telling you another strategy should be implemented, there is typically going to be resistance from suppliers and workers. It is extremely difficult to change operations in a company, and it is just as difficult to build operational analytics into a company as you must build the recognition and the value that operational analytics will have for your company and from your employees.
Overlooking partner synergies
Another potential issue is that the new process suggested via operational analytics may overlook key synergies or softer issues. For instance, you may currently be using a logistics company that is extremely strong in the local area. However, if with operational analytics, your business realises that you should use another distributor that has an international presence as this will help you grow globally such a change may overlook the short run issues with moving from a local structure to a global one. The system may also overlook silent agreements and friendly local deals which can achieve improved profits. While these may be inefficient, they could be necessary to facilitate business in different cultures or contexts.
The next issue is how you get all this data and how to process it effectively. Pulling data from many sources has many issues. Firstly, this data may be in different platforms and formats. Secondly, you must also identify all the sources of data. Thirdly, you must extract all the relevant information, and finally, you will need the right tools to process all the information. This process is complicated and time-consuming, and can result in errors and inefficiencies if not done properly.
However, most of these pitfalls can be solved with A7 IoB® due to it being a unified platform for analysing all your data from business applications. You simply need to connect your applications onto the platform and select key performance indicators (KPIs) important to your business, and then visualise your data in real-time on dashboards that are customisable and easy for you to understand.
Operational analytics can give your business insights to reduce costs, increase efficiency and provide better customer experiences. It is one of the few tactics you can use that improves your business across all 3 aspects. However, it can be difficult to implement, and just by starting on using it may not guarantee immediate results. If you can get a buy-in by your employees and suppliers, and be willing to incorporate it into your production decisions, then will your business reap the benefits.
Make operational analytics easy and effective for your business and employees now with A7 IoB®. Get access to unlimited features when you sign up for free now and begin enjoying the benefits!