How To Build A Smarter Business
I’m a big believer in data analytics. I’ve become interested in learning how analytics is utilized across virtually every discipline you can think of – be it accounting, finance, construction, real estate, demographics, sports, music, etc. In fact, I first became interested in analytics because of baseball. As an avid fan, it fascinated me that early adopters such as the Oakland A’s, Tampa Bay Rays, and my beloved Cleveland Indians began utilizing analytics in the late ’90s to create a competitive advantage. Twenty years ago, very few organizations of any kind had dedicated resources to analytics. Now, that is not the case. Today, there is no room for your organization not to leverage the value of the information it possesses from years of operation and experience.
The rise of data applications and cloud computing has effectively done two things: 1) increased computing power capacity and 2) reduced cost. This means you no longer have to be a billion dollar business to take advantage of your company’s data.
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Here are some of the ways our clients are utilizing data analytics to improve efficiency and drive business.
Job Site Productivity
Contractors can improve workflows, find efficiencies, and cut costs by analyzing data collection from jobsites. And true data analytics is more than just tracking traditional job costs and cash flow. By analyzing data about employees’ movements (i.e. – collected from wearables or smartphones), you can see how much extra movement takes place in the course of a day. This may allow you to make easy improvements such as placing materials and equipment in a more efficient location on the site, for example.
Smarter Bidding
Closely tracking things like job costs, change orders, material/equipment usage, and worker productivity from your projects can help improve your cost estimates on future work. While many contractors already do some version of this, having more complete and relevant data can provide a fuller picture of how jobs fare and where improvements can be made. In addition, increased efficiencies and on-time, on-budget delivery of projects will lead to a solid reputation for your Company, helping open up more potential work.
Predictive Analytics
Ideally, you won’t only assess what happened on a project after the fact. You want data to help you make better decisions based on models of what will happen in the future. Publicly available economic data combined with your own company’s data can help you develop these models rather inexpensively through machine learning. While this is usually farther along in the information evolution process, it’s amazing what you can learn about your business simply from a basic proof of concept.
Of course, there remains some pushback from those who cast all of this aside and say there is no replacement for personal experience or a “gut feeling.” The thing is, the proper use of data analytics isn’t a replacement of our own personal experience in our business or industry. Instead, it represents taking a massive amount of data from those experiences, analyzing it, and assisting us in making better decisions. In statistical terms, it reduces or eliminates the small sample size or confirmation bias (i.e. – using only our own knowledge/experience to strengthen our preferred answer) from the equation. I’ve seen firsthand how the use of data analytics can be utilized successfully for small/mid-size companies.
What’s the best practice? If you’ve read or heard me in the past, this will sound familiar: have a joint discussion among your CPA, technology partner, finance provider, surety, etc. to outline your goals and discuss the best path for using data and creating the value in your business that you desire in the long run.
If your providers aren’t thinking holistically like this on your behalf, give me a call at 614.314.5937 to discuss.
By: Doug Houser, CPA, MBA, CEPA (Director of Construction & Real Estate Services)
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