There is no such thing as too much data. But there is such a thing as not know what to do with the data that you have, or not using it in the best ways possible to develop insights that will be beneficial for the continuous growth of your business. Collecting data from your business and storing this data for later access and analysis is important because it allows you to be able to see your operations and make informed decisions.
Ways to store, access, and use data
To store data, access, and analyze data, companies can utilize:
- Flat Files – which are as simple as Excel spreadsheets where you import data from your business systems or enter the data directly. For example, a simple spreadsheet that lists product IDs, product names, the selling price per unit, and variable cost per unit. These types of files are basic and provide data in one dimension as they do not have links that allow you to see connections in your data, or drill-downs to allow you to see deeper to derive additional information. The advantage of flat files is that they are simple to create and they do not require any expertise. The disadvantages of using flat files are that they take longer to update if you need to make changes, they are prone to duplication of data, and if being accessed by multiple people, they can result in multiple versions of data.
- Relational Databases – which are more complex systems that provide data on multiple dimensions through links to multiple files and systems and can also allow for live data capturing from your businesses’ other systems. Databases allow you to link multiple flat files and sources of data and, therefore, enable you to have a broader view of many data areas in your business and see how they are measuring up. The advantages of databases are that you can easily look up what you need, make comparisons, and change the views of data.
For example, let us say that you have another flat file in addition to the one I mentioned before. In this that same flat file, you have product ID, customer ID, customer name. You also have a third flat file with product ID, customer ID, region, and state. You will be able to add each of those files as tabs in one excel spreadsheet, and then use a V-Lookup formula to link the sheets to form a relational database. To link the files, each file must have at least one data field in common (called a key) with the tab that you will be using as your main database view. In this example, the common fields are product ID and customer ID. So, your main database view tab will have fields for product IDs, product names, the selling price per unit, variable cost per unit, customer ID, customer name, region, and state. Once you create the lookup using the formula, the data from those fields will pull from each of the separate files (tabs) into your main database view tab. This enables you to see all your data in one place but still be able to access smaller, simpler versions of your data in their files and you can make updates there as well that will then update throughout the entire database file.
Once you have this data compiled in your main data view tab, you would create a Pivot Table from this data. The pivot table will make finding important information, derived from the data, a lot easier. For example, you can easily find which state had the highest margins, based on which product being sold the most, and which customer spent the most.
As you can see, managing data is especially important to the growth of your business, but it is important to manage the data in the best way and by using the best tools. Although flat files have their advantages, they do not allow for a deeper view of your data and can lead to you making an improper decision based on incomplete information. It is better to use a relational database to manage data, but you do need to learn how to manage these databases to ensure their optimal performance. Taking the time to learn how to manage your data to derive the best information is truly important for your business’ success.
Check out last week’s post