Unfortunately, such an oversight can result in SMEs losing out to competitors who are effectively using data as a means of improving performance and gaining new insights.
Although smaller companies typically have limited resources and smaller budgets, they do have other advantages: typically, a more flexible IT infrastructure, with fewer legacy system issues or disparate databases, and an ability to change practices quickly.
Using specialist software or services, SMEs can combine existing enterprise data with external data to uncover new insights. While traditional tools from major vendors may be unaffordable for many SMEs, many online and cloud-based options are available to help analyse data – including Google Analytics, Kaggle, Swipely and Tableau. These tools give SMEs access to powerful means for making sense of their business performance in new ways. The large vendors are also developing analytics platforms for middle market companies, increasingly as cloud based solutions.
This can start at the most basic of levels: when Morey’s Piers, an amusement park operator in the US, wanted to assess the relative popularity of different rides, it literally bagged the paper tickets and weighed them. “It was so unsophisticated,” notes Jim Blake, CPA, CGMA, and the firm’s CFO.
Today, electronic gate scanners provide clear data on which rides are performing, and which might need to be switched. To build on this, Blake now works with an external analytics firm to do deeper analysis of the ticket packages it sells online, and which rides are doing most to boost the business.
In the UK, Sweaty Betty, a women’s retailer, used the data and geo-demographical services from Experian to provide detailed insight into customer profiles, which they then used to help devise new store locations.
Then there is Farmstead Table, a restaurant near Boston in the US, which serves up locally sourced food. The restaurant is using Swipely to crunch its customer and payments data, which it uses to surprise and attract customers in smart new ways. For example, by realising that some regular customers always order the freshly caught salmon, the restaurant could proactively advise them when a new catch had come in. This has boosted both sales and customer loyalty.
More adventurous SMEs are even tapping into the capabilities of advanced data scientists, without the budgets or capability to bring such resources in-house. One mobile app developer, Jetpac, which provides an app that turns friends’ photos into a custom magazine, wanted to develop an algorithm to automate the process of finding the best pictures to use. To do so, the firm turned to Kaggle, a platform that matches data-related requests with leading data scientists from around the world.
In three weeks, and for just $5,000, Jetpac found its answer – far cheaper and faster than it could ever have done itself. Tools like these are changing the scope of possibilities available to SMEs on data. They also can help to highlight that embracing data tools doesn’t have to mean a huge financial commitment for those seeking to affect positive change on their businesses.
Inevitably, taking advantage of these opportunities will be challenging for SMEs, creating the need for new skills, tools and ways of thinking. However an evolution is required and if small and medium sized businesses can take the step up, they are sure to ensure their commercial advantage.
Peter Simons is a Technical Specialist at the Chartered Institute of Management Accountants