According to retail legend, a US supermarket analysed data from its customer loyalty cards and found that on Friday nights, between 5pm and 7pm, customers frequently bought both beer and nappies. The data, courtesy of the retailer’s investment in systems and processes, formed a compelling argument to move the beer aisle closer to the nappy aisle. It was the right decision. With a better view of their demographic group of new parents facing a weekend indoors, the supermarket achieved a 35 per cent increase in combined sales.
Admittedly, it is a long stretch from grocery store to a professional services firm, but just imagine what you could do with some really intelligent analysis of your data. You could:
- predict services that clients might want and position them alongside services that they actually do want;
- track what your clients look at on your website and where they go next to identify their potential needs;
- bundle services and products in ways that fit logically with client behaviour; and
- Understand what services, clients and matters are profitable and which are not.
The problem with data
From basic spreadsheets to tailored dashboards, the rudimentary purpose of management information (MI) systems is to record and report data.
Often, a core practice management system generates around 70 percent of a firm’s data, which is typically finance or time-based. It might be complemented by HR systems or customer relationship management (CRM) systems, or even forward-looking market-focused systems that keep an eye on trends. The trick is getting the systems to talk to one another and to turn out consistent and reliable data to inform decision-making.
Systems cannot talk to one another if data is structured in ways that make it difficult to access, except by specialist technical experts who may not necessarily make the link with market position or firm-wide strategy. Meanwhile, valuable analysis and extraction of business insight is extremely difficult while the finance team are preoccupied with compiling and maintaining cumbersome spreadsheets.
What is the right MI?
Professional services firms need a clear view on the information they use to run the business and the processes that extract it, structure it and make it available to the people who need it at the right time.
A robust MI solution works with business strategy. It focuses on how the business is perceived by stakeholders and clients and how well it delivers what clients want. Key Performance Indicators measure financial performance, external client-facing performance, operational performance and continuous improvement to ensure the business remains on track.
However, whilst it can be useful to look at what has happened historically, this is not necessarily all the information you need to make decisions about the future. Do you, for example, use indicators that will only tell you what has happened in the past (lagging indicators)? Or do you use indicators that can help you predict the future (leading indicators)?