In the 5 Key Performance Indicators for A/E Firms blog post, we shared five of the top business metrics that can be used to evaluate the performance of A/E firms. These measurements fall under the umbrella of Business Intelligence (BI), and they concisely communicate how your organization is performing. They are necessary for accountability, but they may not tell the whole story. Predictive analysis for critical business decisions may require insights that metrics alone cannot provide. This is where Business Analytics (BA) can help.
What is the difference between BI and BA?
The lines blur a bit between BI and BA with some experts considering BI as a subset of BA, while others believe the reverse. Regardless, there is agreement that BI focuses on backward-looking data and BA concentrates on forward-looking data.
Business Intelligence addresses questions like “What happened?”, “How many?”, “How often?”, “Where is the problem?”, and “What actions are required?”.
Business Analytics can answer questions like "Why did it happen?", "Will it happen again?", and "What will happen if we change a variable?", "How can we improve the outcome?", "What else can we learn from the data?".
How can we use BA to improve our firm's performance?
Smart firms use Business Analytics for data-driven decision making. BA can help forecast the impact of decisions before they are made. These data-driven firms treat their data as a corporate asset and leverage it for competitive advantage. Firms can draw insights from the following methods:
Statistical and quantitative analysis to explain why specific results occur
Testing previous decisions using A/B or multivariate testing
Data mining (exploring data to find new patterns and relationships)
Making use of predictive modeling and analytics to forecast future results
A/E firms can make the following data-driven decisions with Business Analytics:
Which new markets or industries should we pursue or grow?
What services should we develop?
Where should we open a branch office?
When should we and which staff should we hire?
What is our projected revenue?
How does your firm get there?
A firm's success in Business Analytics will depend on the amount and quality of data, the technology available to interpret the data, and an understanding of the business and the technology available. You can follow these general steps to make the most of your data:
Define the business objectives
State your problems in ways that can be quantified. Asking the right questions is very important. Thorough knowledge of the business and its operations is particularly valuable.
Implement the capability to collect data and analyze data
You’re likely collecting a certain amount of data now, but you may not be collecting the right data or enough data to support your decisions. You’ll need to define the data and your collection method. Also, you’ll need to decide on an analytics tool to help you digest it all.
Collect and model the data
Data can be collected via automated and manual means. If your switching software platforms then large amounts of data can be imported quickly. Validation should be in place to ensure that the data is good data is and meets requirements.
Analyze the data
Now that you have useful data, you can analyze it using the techniques mentioned above. Using multiple methods can help your team examine the results and draw better conclusions. Look at the data from various perspectives to be sure you are eliminating bias and are not ignoring relevant information. You may find that you need more or different data.
Develop recommendations and take action
The results of your analysis should allow you to make recommendations that can be applied to the business. These can include operational changes or new organizational behaviors and strategies.
Data tells a story and using the right tools to illustrate that story will be necessary to take full advantage of it. Some firms attempt to use separate products for collection and analytics, but this can be unsustainable and produce poor results. While there are many software options out there that can help, the most useful options can facilitate collecting and analyzing data in one integrated package, supported by experts that know your industry. Once your tools are in place, you’ll find it easier to repeat this process and produce continuous improvements for your firm.
About the author: Gerald Cox is the Director of Business Development at Clearview Software. Clearview makes InFocus, a comprehensive ERP system built for A/E firms. Previously overseeing technology at an AE firm, Gerald knows the ins-and-outs of many software systems, including InFocus. He enjoys helping people in the A/E space solve problems and connect with each other. He can be reached firstname.lastname@example.org.
Clearview Software is a sponsor and exhibitor of PSMJ's annual conference to held October 22-24 in San Diego. THRIVE 2018 is your chance to learn, to network, and to get an eye-opening perspective on what the world’s most successful architecture and engineering firms are doing right now to thrive. This unique annual conference attracts senior-level executives from a wide range of A/E/C organizations located around the world.