Real-time data is important for your business. But why?
In this article, we take a look at why it can support forecasting and budgeting, monitoring financial performance, and help you stay on top of your cash flow.
Here’s what we cover:
- The power of real-time data
- What is real-time data?
- Real-time automation
- 5 benefits of real-time data for business growth
- Identify the business areas that real-time data can improve
- Make sure you have a single source of truth
- Focus on real-time insight and analysis that matters
- Final thoughts on supercharging real-time data for business growth
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The power of real-time data
So why is real-time data powerful? Let’s use a simple example…
You’re a driver navigating through a busy city. You have a friend with a paper map to guide you, but the information is outdated.
You can’t see what lies ahead.
You make decisions based on assumptions, hoping that traffic conditions won’t change. But the city can be unpredictable, and you could easily find yourself lost.
Now, swap that paper map with tech in the form of GPS.
The GPS provides real-time information on the weather, road conditions, traffic and obstacles in your path. With this information, you can make informed decisions, adjust your course, and reach your destination in good time.
Just like a driver, accurate and up-to-date information provided by technology can help you make informed decisions and navigate through your business challenges.
What is real-time data?
Real-time data is a stream of information generated and processed at the same rate it is received, allowing immediate analysis and decision-making.
You can use real-time data in many industries, from healthcare and financial services to manufacturing. It can improve business processes, help you make better decisions, predict future events, and avoid unnecessary delays.
Dash Tabor is the CEO of Tubr, a startup building a predictive platform looking to turn small amounts of data into business insight. Dash says it’s important not to confuse real-time data with taking a ‘snapshot’ of a certain time, as a snapshot doesn’t give you a full view of what’s happening in your business.
“Real-time data is actually about ‘series’ data—constantly flowing over time,” says Dash. “Over minutes and seconds, you’re creating little data points.
“Let’s say you’re moving your hand. If you’re collecting data from that process, you have a data point for each movement. That’s what creates time series data.”
Clare Bowen is a director at Monahans, a leading accountancy and business advisory firm. She says: “You can use up-to-date information to fuel modelling tools that play out scenarios for the future of your business. If you’re taking on a new project, how many staff will you need, and can you afford to pay them?
“Having real-time data lessens the chances of you being caught by surprise. It allows you to be proactive and respond to situations as and when they happen.
“In contrast, if you don’t understand your financial position, you’re limiting your options and even risking exacerbating issues further when the crunch time comes to make decisions.
“As a small business owner, it’s not uncommon to come in on a Monday morning and find something on your desk that you were not expecting. You can’t plan for everything.
“But if you understand your financial situation, your decisions can be based on fact rather than conjecture, and you stand the best chance of mitigating against issues and their impacts, as well as achieving growth.”
Rob Israch, president at Tipalti, raves about the benefits of automation in allowing you to spend less time on low-value mundane tasks and more time reviewing up-to-the-minute data.
Rob says: “With the economy in a state of flux, businesses need real-time visibility over their finances to make timely and informed decisions that will decide the future of the business.
“Automation of manual processes paves the way for such efforts, enabling finance teams to analyse and interpret data more meaningfully.”
Gijs Barends, co-founder of Dataprovider, says automation has revolutionised marketing and made its strategies much more efficient.
He says: “With real-time data as a source for automated marketing analytics, you can make timely, data-driven adjustments or improvements to marketing campaigns. In short, you are saving time and moving more quickly.
“For business development, I think it is essential for businesses to rely on real-time data sets to take advantage of emerging trends and growth opportunities as they arise.”
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5 benefits of real-time data for business growth
1. Monitoring financial performance
Real-time data can help you stay updated on the financial performance of your business in real time, allowing you to make quick decisions when necessary.
Let’s say you’re tracking sales data in real time. You can identify trends or consumer behaviour shifts and adjust your strategies accordingly, rather than wait for periodic reports and lose valuable time.
Another example is pricing or product development. You’ll have more accurate information on which to base your choices.
Laurent Descout is the founder and CEO of NEO and a serial fintech entrepreneur, investor, and asset financial adviser.
He believes data analytics should be at the heart of financial management and that enhanced insights can be transformational, especially for small and medium-sized enterprises (SMEs).
Laurent says: “SMEs don’t have the resources of larger organisations and can find tasks such as maintaining a positive cash flow challenging. You can make better-informed decisions with a more in-depth understanding of your business.
“Using tailored data and analytics from your trading history, payments and cash flow, your finance team can make smarter decisions, review your specific corporate behaviour, and personalise your hedging and risk management strategies.
“Finance teams have always been forward-thinking, but the past few years have tested the limits of their operational capabilities. To remain responsive to the fast-changing business environment now is the time to use real-time data analytics.”
Nick Jewell, a data evangelist at Incorta, says legacy software and manual processes are the root cause of why some CFOs and financial directors can’t access and analyse data almost immediately after it’s generated and captured.
He says: “It’s why they can’t see yesterday’s transactional sales, a financial close takes 15 full days at the end of every month, and why planning and budgeting processes need so many revisions to reflect late-arriving data.”
2. Forecasting and budgeting
Real-time data can help you create more accurate financial forecasts and budgets by incorporating current and up-to-date information.
You can be proactive rather than reactive, making more informed decisions about your company’s financial health, helping you avoid making costly mistakes.
The more you know about your current business and its performance, the more accurate your budget can be. This is because real-time data gives you a better sense of how your business is doing.
This makes it easier for you to predict how much money you will have coming in next quarter or next year, as well as what kind of expenses might be coming up soon—which is key for planning so your company stays on track!
If you’re a manufacturer or distributor, real-time data also gives you a better understanding of how much inventory you need to keep on hand, so you don’t run out during busy seasons, for example.
A crucial aspect of using real-time data is being able to communicate it effectively to other members of your team. This includes employees who need this information for their own work, and executives who require it for decision-making purposes and planning future growth strategies.
3. Cash flow management
You can use real-time data to monitor cash flows, allowing you to make informed investments and other financial decisions.
First, it lets you know when your business is losing money and how much, so you can act before it’s too late.
Second, it allows you to adjust for fluctuations in your business model. If one quarter is slower than usual, but the following quarter is better than expected, real-time data will help you predict what will happen next.
This way, you can adjust your strategy and better prepare for the future by spending more on marketing now or putting more money into savings so you won’t be caught off guard if things slow down later.
Third, real-time data gives you an early warning system for potential problems with suppliers or customers.
If they’re not paying their bills on time or at all, this information will let you know so you can act before those bills become due—and before those unpaid invoices turn into a bigger problem down the road.
4. Risk management
You can use real-time data to identify and assess potential financial risks in real-time, allowing you to take proactive measures to mitigate these risks. This can help reduce the impact of any negative events and ensure the long-term stability of your business.
Forecast is a company that provides artificial intelligence (AI)-based project and resource management software. By connecting their data, Forecast allows customers to understand what’s happening with their projects in real time—but that’s not all.
With an added layer of AI, Forecast can signal, for example, whether a project is likely to overrun and have problems with delivery. Customers can be alerted by predicting what will happen based on their data so they can make decisions based on that information.
Melanie Lawn, chief customer officer at Forecast, says: “Our platform allows customers to be incredibly agile with how they resource their people and their projects, as well as track their time.
“With real-time data, customers can make very quick decisions to ensure the project cost is kept within budget and not over-serviced.”
5. Improving operational efficiency
You can use real-time data to identify inefficiencies and areas for improvement in operations, leading to cost savings and improved profitability.
Customers expect fast and convenient services. With real-time data, you can give a better customer experience by understanding your customers’ needs and preferences.
If you can track customer interactions in real time, for example, you can respond to queries and resolve issues more efficiently, improving customer satisfaction and loyalty. You can also track sales conversions, improve marketing campaigns and provide better customer support with live chat services and responses to frequently asked questions.
If you monitor your supply chain in real time, you can quickly identify and resolve any issues, reducing downtime and improving efficiency. You’ll save costs, increase productivity, and improve customer satisfaction.
Gediminas Rickevičius, VP of global partnerships at Oxylabs, says: “Whether it’s pandemic-caused shortages, a ship trapped in the Suez Canal, or war-related trade disruption, current supply systems are unexpectedly vulnerable.
“Big data systems can combine data on consumer patterns from e-commerce sites and retail apps with supplier data, real-time pricing, and even shipping or weather information to deliver a previously unseen degree of precision.”
Identify the business areas that real-time data can improve
The first step is to identify the key areas in which you want to see improvements.
Dash Tabor says: “You need to conduct sanity checks before jumping in and attempting to use your business data. I would always advise that you start by looking and understanding what data you have and where it’s located.
“You need to understand the quality behind your data, particularly real-time data, because of its constantly flowing time-series nature.
“The speed at which it arrives will impact how complete that data set is. A lot of the time, incomplete data can be a limitation to getting good results.
“How you cut and dice the data is very important. Make sure you’re populating the data the way you want it, so it can work together in the way you want.
“You need a goal or objective and a foundation in place. Then put together a strategy to answer that goal.”
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Make sure you have a single source of truth
Real-time data needs one source of truth to ensure everyone in your business makes decisions based on the same data.
It’s important because it allows you to make decisions quickly and accurately without worrying about conflicting data points.
A single source of truth also helps to reduce the risk of errors and inconsistencies in data, as well as the time it takes to reconcile different versions of the same data set.
Having one source of truth can also help you ensure your data is up to date and accurate. Using good cloud financial software can help you with this.
Dylan Connerton, VP of product at Forecast, explains that having one source of truth regarding data is necessary to provide the real-time insight his customers need.
He says: “It’s the ability to connect lots of different data sets, through a combination of your financial perspective, project details and resourcing, to understand how decisions you make in one area can trade off against another.
“That provides customers with very useful insight.
“Real-time data is about being up to date. But offering customers the ability to connect many different data sources to understand how they impact each other is where things start.”
Focus on real-time insight and analysis that matters
Anne Marie Kilkenny, partner at Oliver Wight, questions whether your business needs to collect every piece of data, given you’ll end up ignoring a lot of it.
Big data has made millions more data points available, but the key question is whether this drives better decision-making.
Anne Marie says: “Just because you can access so much data does not necessarily mean you should. Often, it just creates more noise rather than bringing clarity.
“You must be clear on the information you need to make good decisions in difficult trading conditions.
“It’s most important to have a shared view, so you can debate what to do about what the information tells you instead of wasting time asking who has the correct data.
Anne Marie warns you not to get stuck into the ‘assembling’ stage, where you gather the data.
She says: “You need to get down to analysing that real-time data and getting insight.”
She adds that it’s easy to react to single data points instead of understanding the underlying trends.
The focus must be on what will move the needle in delivering your strategy and getting to one set of numbers. Get this right, and you can apply gut instinct in your decision-making, backed up with hard numbers.
Anne Marie says: “This comes down to clarity about strategic priorities and levels of understanding of the internal and external drivers of the business.
“Instinct can be a strength in some circumstances, but instinct informed by good data has to be better than data-free decision making.”
However, a caveat here is that building block data, such as that used for enterprise resource planning (ERP) systems, must be spot on.
“Accurate basics such as customer, item, supplier, bill of materials, lead times and lot sizes, etc, have to be non-negotiable,” says Anne Marie.
“Without this robust foundation, you will waste lots of time figuring out what is happening.”
Final thoughts on supercharging real-time data for business growth
With more real-time data, your business can quickly make informed decisions, process changes, and respond to competitors. You can focus on what’s important and, in turn, create new sources of revenue or gain a competitive advantage.
If you want your business to succeed, invest in technology and systems that can provide real-time data and insights.
But as important as data is for business success, it’s even more important to be able to interpret it effectively.
Knowing how to sift through the mounds of data available can mean the difference between standing out from the crowd and falling behind.
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