Data is crucial for the overall performance of every business. Due to the recent growth and advancements in modern technology, data-driven decision-making now plays an important role in many companies.  This approach means that important business decisions are based on data rather than intuition or personal experience.

Data-driven decision-making is a powerful tool to ensure that the decisions made within a company are supported by data from multiple sources. Effectively, data-driven organizations are three times more likely to report significant improvements in decision-making compared to those who rely less on data. Companies that adopt a data-driven approach report not only higher profits, but also higher productivity.

What is data-driven decision-making?

Data-driven decision-making (DDDM) is the practice where data is collected, analyzed, and decisions are made based on the insights derived from the collected information. DDDM is the process of basing business decisions on evidence and facts to better understand what the next step in a business should be, and what it should change to better perform and compete in the technological market. Without the use of objective data, there is a greater risk of making decisions based on false assumptions, which can jeopardize your business in the future.

In business, this process can include the collection of survey results to identify products and services your customers would like, research studies to understand how a product might perform in the market, as well as the analysis of statistics to determine business opportunities. The decision-making process based on data has several stages, such as:

• Identifying a problem

• Collecting and processing internal and external data

• Creating reports, dashboards, and visualizations

• Making informed decisions

• Measuring the outcomes using Key Performance Indicators (KPIs)

Data-driven decision-making has a significant impact on different types of businesses. According to the latest information provided by Statista, the industries with the biggest investments in data and analytics in 2020 were banking, IT, discrete manufacturing, professional services, process manufacturing, and telecommunications.

Advantages of data-driven decision-making

New business opportunities

Transforming your company into a data-driven opens space for improvement and innovation. By using data to make decisions, you can effortlessly identify and discover new business opportunities before your competition does. At the same time, the data collected from different sources will ensure that you make solid decisions that benefit the evolution of your business. By gathering that information, you will be able to make more accurate choices and increase your revenue.

Reduce business risks

Data-driven decision-making helps businesses detect errors before it becomes a possible threat to your company. By analyzing the information gathered from data analytics, companies can better understand their business and how changes in the market could impact long-term strategy. In this way, data-driven decision-making allows your company to discover which areas might cause problems later in the future.

Efficiency

The rate of business success will increase if you have access to valuable information designed for decision-making. The information gathered can then be used to improve efficiency. When an organization makes decisions based on data and facts, the speed of decision-making dramatically increases, and it becomes more reliable and efficient. By knowing that you are making the right decisions, data-driven decision-making also gives confidence to your business.

Cost and time savings

Without the use of data, you run the risk of being influenced by external factors, which can cost money to your company if you make the wrong decisions. Furthermore, by automating your decisions, you can save time by not having as much data to organize and plan. In this sense, employees can save time and resources by avoiding costly mistakes and by cutting out unnecessary tasks.

Transparency and accountability

Transparency is important to ensure a trustworthy relationship between clients, stakeholders, employees, investors, and company leaders. Data-driven decision-making is based on objective data and as a result, it improves transparency and accountability in the decision-making process. A company that focuses on data allows employees to understand the objective of data backups, which also enhances its overall performance. This approach will make organizations be seen as more accountable since they collect and manage objective data and use it for record-keeping.

If you are interested in data-driven decision-making but do not know how to start, at PrimeIT we are available to help you make informed decisions that will allow your business to grow and become more competitive in the market. Talk to us!