Are you doing things right or doing the right things?
How to optimise your business with data analytics
Sooner or later, business performance might need a boost, e.g. in liquidity, profitability, or return. Whether the organisation is looking for ways to create more value or whether the business is actually in bad weather. This requires in-depth insight into all aspects of a company, from strategy and operations to finance and/or and how these aspects are interrelated, to make the right strategic choices for future success. Here’s how.
At some point in time, every organisation has to face the question whether they are doing the right things or merely doing things right. How to create more value? Maybe a “quick scan” will do, or an analysis of future investments or current working capital optimisation, or a turnaround process to improve profitability or stakeholder value. At other times, matters might be more urgent. For instance, when investors or other stakeholders demand additional support or analyses because the business seems to be in bad weather, either strategically, operationally or financially – or all of the above. In all cases, it is pivotal to have as much management information as possible in order to make the right decision. Whether it’s eleven o’clock and there’s still time to create value, or whether it’s nearly twelve.
Facts are friendly
Over the last few years, collecting and analysing data has improved dramatically. As Deloitte, we have been working with data analytics (and many other new technologies) for a long time in all our services. The results are spectacular. Or, as we say, facts are friendly. Before, management information usually zoomed in on particular departments (e.g. strategy, operations, product portfolio, and project analyses), providing a rather narrow interpretation of what was going on in the organisation. Nowadays, advanced data analytics allows us to gather, analyse and connect almost unlimited amounts of information, from around the entire company and from various points-of-view, at an incredible speed. This offers new, reliable insights into business performance that would otherwise not be available.
The 80/20 rule
In many cases, the (financial) facts reveal that the 80/20 rule applies: roughly 80% of total profits are the result of 20% of the product portfolio, or 20% of all teams. Sometimes the analysis points towards strategy, sometimes towards operations – each case is different. Based on this information, we help our clients to make the right strategic choices to be successful in the long run, as hard as that may be at first. We do this in collaboration with the client’s management or the client’s team, because collaboration is key in iterative processes like these. Whether the business is still in good shape but looking for value creation (when our Value Creation Services team steps in), or whether the pressure from stakeholders is increasing and liquidity issues indicate that time is running out (when our Restructuring Services team can help out).
Case 1: improving efficiency at a retail chain
Our teams work for businesses of all sizes and from all industries and the types of challenges are manifold. To name a few: we provided a retail chain with insight in the individual performances of each practice in the fields of finance, HR, and types of products/services. These data were combined. Based on our analysis, we were able to show e.g. what basic products and services were followed up by other types. It allowed the management of the chain to view their data from a different perspective and do a number of internal and external benchmarks.
Case 2: working capital analysis for a trading company
Also, for a trading company, we performed a working capital analysis to determine the cause of a substantial rise of their stocks. We were able to visualise the data, followed by the design and implementation of an optimisation program. Working capital is usually a very helpful angle, since it offers insight into the supply chain from cash to order and from order to cash (e.g. stock, debts, and payables), for any number of data. Presenting these insights in a “cashboard”, we can optimise them, which means extra cash is available for e.g. topline, capex, acquisitions, dividend, or reduced debts. Also, analysis of the working capital helps us to identify other optimisation options within the client’s organisation. Of course, there are many more instances. Please contact us if you want to find out more.