While instinct is an important aspect of leadership, decisions should be made based on evidence and facts. This is especially true for institutions that operate in the public interest.
Unfortunately, many organizations do not have the infrastructure or processes in place to use their data to derive insights and take action. With the rise of the digital age, however, it is now easier than ever to implement fact-based decision making.
Financial reporting is one key category of data required to make informed decisions. There are three key components to keep in mind when considering the quality of the financial information used in the decision-making process:
- Timeliness. How current is the data you are receiving?
- System quality. How advanced is the system delivering the data?
- Security. How safe is your data?
Timeliness
To understand the outcomes of past decisions, you need relevant results within weeks, not months (or, even worse, years). Having a team of dedicated accountants is one way to ensure you receive results as quickly as possible. By storing your data on the cloud, you have access to this information the moment it becomes available.
System Quality
Data management systems come in all shapes and sizes and at all levels of sophistication. To use car-shopping language, there are “clunkers” and Cadillacs. While a clunker may get you from point A to point B, a Cadillac will ensure you get there as efficiently and effectively as possible. You may think a top-of-the-line information system is beyond your organization, but improvements may actually be within your reach.
Security
To be able to use your data, you need it readily available, even in the event of a system disruption. Do you know where your data is being held, or whether or not backup copies are kept? Secure, centralized server locations and daily backups are needed to guarantee data security. You need to know that your data is safe.
Analytics: Three Types
Analytics are the processes performed once useable data is identified. There are three main types of analytics:
- Descriptive analytics. The most basic level of analytics, they are used to understand what has happened in the past.
- Predictive analytics. Data regarding past events are used to forecast future events.
- Prescriptive analytics. Data and trends are used to guide your current and future actions.
For leaders of public institutions, all three analytics categories are needed to practice evidence-based decision making. Together, they can help you interpret your data and determine your next steps. When it comes to tax and charity dollars, acting on instinct is no substitute for data-driven decisions.
Contact us to find out more about how our Technology and Outsourcing services can help your organization make better business decisions using data.
For more information
Austin Mitchell – Manager, Assurance & Accounting
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Deanna Lancaster – Partner
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Daryl Senick – Partner, BDO IT Solutions
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