Data analysis for SMEs

A critical analysis

„Data analysis for SMEs“ or „Data Science“ should really be one of the top topics for medium-sized companies. Because these are times when the future is very difficult to predict based on experience alone. Has the Corona crisis It has robbed us of so many certainties and accelerated a digitalisation that means change on a scale that cannot yet be estimated. How obvious it would be to fall back on the tools of advanced data analysis. Can BI and AI show us the way into the future(?)

Tentative middle class

Is data analysis a hot topic for SMEs? The Medium-sized companies approaches the topic rather tentatively. The approaches often go beyond a simple ABC analysis from customers or suppliers. One reason for this is the lack of data availability. This is often due to business processes that are still not standardised. Sometimes there is simply a lack of experience in data science. Data processing is rarely digitalised throughout. Media disruptions are often the rule and prevent the structuring of data. What's more, around 30 % of the data used by SMEs was not collected by them or does not come from their own sources.

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Tentative providers of data analysis for SMEs

Secondly, there is still a relatively clear range of suitable instruments and advice specifically for medium-sized businesses. Of course, there are many data analysis tools and masses of corresponding software. However, the models that are realised with them rarely target small and medium-sized businesses. This follows a certain logic, as industry and large companies generate a completely different quantity and quality of data. Even young data analysts often lack access to data analysis for SMEs for more „cultural“ reasons. Coming from a rather scientific approach, it is difficult to provide a clear answer to the question: What are the benefits and what are the costs? This is an understandable dilemma, as one only knows whether the data treasure is a treasure after analysing it.

A science in itself

As already stated: There are many tools available for data analysis for SMEs. Mostly, the results are presented as attractive charts and interactive dashboards. However, the same applies to data science: „A fool with a tool is still a fool“. Therefore, advice from several experts may be required. Some can answer questions such as: How are my data structured and how do I transfer them from this structure to a layer for data analysis. These would likely be consultants who work within the „insides“ of business software.ERP, CRM, DMS etc.) are at home. How this data is then processed in combination with other data sources of structured and unstructured data into a treasure trove of data that yields new insights is more the responsibility of the data analysts.

Choosing the right approach to data analysis for SMEs

The approach to data analysis for SMEs is usually derived from a question that indicates a suitable approach:

What happened? (Descriptive analysis)

You look at the past and compare it with the present. This approach to data analysis will not be sufficient for SMEs to gain new insights. However, it will almost always be the starting point. Data such as resources utilised, waste produced, costs incurred, etc. are determined. It would be nice if these figures could be retrieved from the well-integrated business software at the touch of a button. Unfortunately, the reality is that this is not always a matter of course for medium-sized companies.
Why did it happen? (Diagnostic analysis)

This is where data science becomes more interesting. This involves comparing data and recognising patterns that reveal a reason for a certain experience or event. Answers or at least clues to questions such as Why are we losing orders to competitors in a certain sector? What is the cause of increased costs or material consumption? etc. In an average medium-sized company, this discipline requires the consolidation of several data sources.
What will (can) happen? (Predictive analyses)

Here we have arrived at the supreme discipline of data analysis for SMEs. This is where the providers promise the innovations and the companies promise themselves the greatest benefits. Patterns and trends are recognised on the basis of structure-recognising processes. These findings help with decisions and the definition of strategies. Which customers will buy what in the future? How will costs and earnings develop in which market? What impact will which investment have on the company's cash flow? However, information on new business models and markets is also requested. The quality and quantity of data is crucial for such statements. A medium-sized company's own data sources are rarely sufficient for this.

It is about decisions

There are those who describe the new or recent trends in data science as just old wine in new bottles. Other enthusiasts see big dataAnalytics, mash-up, data integration and the like are seen as the saviours par excellence without which companies are doomed to failure in the future. None of this is likely to properly address the topic of data analysis for SMEs in absolute terms. It is fundamentally true that companies have always faced the challenge of doing the right thing at the right time. And to do this, the entrepreneur must constantly make the right decisions at the right time. The ability to make these decisions has always been the supreme discipline of the entrepreneur. However, with the increasing acceleration of life and ever more complex tasks, the experience and decisiveness of individuals is no longer enough.

A matter of people

When you delve into data analysis for SMEs, it quickly becomes apparent that implementing a suitable strategy cannot be a one-off project. Another realisation: it's not an IT matter. You need in-house expertise for this. Employees who are constantly involved in decision-making processes with the background of a data analyst. Even then, you still need to ask yourself whether using data science makes decision-making easier, more difficult, or just „different“. The psychological hurdle for many a decision-maker should also not be underestimated. The aura of the decision-maker and doer is tarnished when the „data oracle“ is consulted before a clear instruction from the boss.

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