Analytics Tools: What, How, and Why?
Analytics tools are designed to help you make decisions or, at the very least, streamline your company's decision-making processes by collecting, visualising, and communicating your data.
What is an Analytics Tool?
There are many different types of analytics tools, but most often it refers to software that helps businesses analyse data. Analytics tools are often referred to as Business Intelligence tools or decision support systems.
Data analysis is becoming increasingly important for businesses, and the potential for value creation is significant. An analytics tool helps you work with, analyse, and distribute data to ultimately drive better outcomes and decisions in your business while reducing risks.
As the value of data continues to increase, along with the associated skills in data and analytics, the meaning of being "data-driven" is constantly evolving. Those who can improve their capabilities the fastest will derive the greatest value from their analytics tool.
Hypergene's solution is an example of software that includes BI tools/decision support systems. The Analysis & Insights module is dedicated to providing you with the right analysis foundation and insights. It also offers integration with existing BI solutions, allowing data to be utilised in both systems.
How to Use an Analytics Tool?
An analytics tool can help you understand both the external environment and your own operations, enabling decision-making at various levels (macro, micro, real-time, cyclical, strategic, tactical, and operational). It also offers new opportunities to gain insights into areas or questions you didn't know you needed or should ask.
Companies primarily use analytics tools to track their progress and to anticipate and solve problems. Common use cases include:
- Monitoring relevant key performance indicators (KPIs), analysing trends, and identifying deviations.
- Providing decision-makers with relevant, quality-assured, and comprehensible information.
- Visualising data through graphical visualisations and interactive table views.
- Ad hoc analysis.
- Data and information compilation and reporting.
A significant part of analytics work often involves analysing financial data. This can include profit reports, other finance-related reports, and analyses, as well as simulations of budgets, financial forecasts, rolling forecasts, or financial scenario planning.
The choice of analysis and analytics tool often depends on the type of company you work for, the industry you operate in, and the KPIs and goals prioritised by the company.
In larger organisations, business operations quickly become complex as data resides in multiple source systems, such as ERP systems, HR systems, and CRM systems. Therefore, analytics tools are often needed to facilitate the analysis of how well the company and its employees are performing, with integrations to different source systems and built-in functionalities.
According to McKinsey, Corporate Performance Analytics is a digital platform for comparative financial performance data, allowing you to develop strategies and gain insights through data-driven decision-making.
What Should a Analytics Strategy Look Like?
According to Gartner, every company must define what an analytics tool means to them and identify the initiatives (projects) and budgets necessary. You should also work to overcome gaps in the data ecosystem, architectures, and organisational delivery methods required to implement the strategy.
- Start with the organisation's vision, mission, and goals.
- Determine the strategic impact of analytics (the analytics tool) on these goals.
- Prioritise actions to achieve business goals using data and analytics objectives.
- Build a strategic roadmap for data and analytics.
- Implement the roadmap (i.e., projects, programs, and products) with a consistent and modern operational/business plan.
- Communicate the analytics strategy and its impact and outcomes to gain support.
Why Use an Analytics Tool?
For many companies, analytics and improved insights have become a competitive advantage. To reach that point, it's important to build processes, knowledge, habits, and teams tailored for effective decision-making.
McKinsey suggests that while data and analytics are commonly used to enhance operational efforts, the same transformation hasn't been observed in the management of data and analytics that support corporate strategies.
According to McKinsey, when management utilises data and analytics tools in strategic work, it helps your company to:
- Reduce bias in decision-making by assessing the likelihood of success before reallocating resources.
- Discover new growth opportunities by complementing traditional brainstorming methods with data to uncover hidden growth prospects.
- Identify early-stage trends by monitoring the development of your company's external environment, enabling you to take action before your competitors.
- Anticipate market evolution through insights derived from your own data analysis and the interaction of different influencing factors.
Among many companies, tech transformations and transitions to more agile ways of working are occurring, and here too, data and analytics play a central role in shaping strategic plans.
10-minute video demo of Hypergenes solution: