What is Performance Analytics?
Performance analytics is the study of a company's performance indicators, the factors that drive them to rise or fall, and how the company may enhance performance.
By studying strategic performance measures, decision-makers can easily understand where performance is weak and how to make decisions to improve.
It is critical to analyze performance data by identifying any deviations from planned metrics, determining:
- why these deviations occurred,
- situating the company's success in the context of market and customer behavior,
- and deciding what to support and discourage in preparation for future periods.
Types of Performance Analytics
The following categories of core analytics components are used to examine performance data:
- Descriptive analytics
Descriptive analytics help answer questions about what occurred based on historical data. These tactics measure the success or failure of strategic objectives by tracking and examining key performance indicators (KPIs).
- Predictive analytics
Predictive analytical tools can help you predict what will happen in the future. Predictive analytics can assist in determining what will occur in the future. Historical data is used in predictive analytics approaches to discover patterns and decide if they are likely to repeat. Statistical and machine learning techniques such as neural networks, decision trees, and regression are used.
- Prescriptive analytics
Prescriptive analytics can assist in determining which activities should be made to meet a goal or target. You may make data-driven choices by utilizing predictive analytics insights.
- Cognitive analytics
Cognitive analytics can assist you to figure out what could happen if things change and how to deal with it. In a self-learning feedback loop, cognitive analytics tries to make inferences from current data and patterns, deduce conclusions from existing knowledge bases, and then put these discoveries back into the knowledge base for future speculations.
- Diagnostic analytics
Diagnostic analytics can assist you to figure out why things transpired the way they did. Diagnostic analytics approaches complement basic descriptive analytics, and they employ descriptive analytics findings to figure out what's causing these occurrences. Then, performance indicators are looked into further to see why these occurrences have improved or deteriorated. This procedure is usually broken down into three steps:
- Recognize any discrepancies in the data. Unexpected changes in a statistic or a specific market might be the source of these anomalies.
- Collect information about the abnormalities.
- Discover correlations and patterns that explain these abnormalities using statistical approaches.
Why is Performance Analysis Important?
Performance analysis is a vital part of running a business. When done correctly, it can assist you in utilizing data analysis to your advantage, allowing you to expand your company even further.
Regularly assessing your organization's performance will assist you in determining how far you have progressed toward your strategic and operational objectives. You can use performance analysis to review critical indicators monthly or annually and develop improvement strategies. Learning about performance analytics might be beneficial if you seek a data-driven technique to understand how your organization or team members function.
Telling a Story with Data
Data storytelling is the ability to successfully explain insights from a dataset using tales and visuals. It may be used to put data findings into perspective for your audience and motivate them to take action.
The ability to tell a story with data is the key to unlocking it. Crafting reports that communicate that story is what enables company executives to take action on the data in today's highly competitive and fast-paced business environment. Corporate decision-makers rely on correct information to make better business judgments. The more quickly a company can make accurate judgments, the more competitive it will be and the greater its advantage. It's tough to grasp what the statistics are trying to tell you without the story.
Data storytelling is made up of three main elements:
- Data: The cornerstone of any data story is a thorough study of correct, complete data. Using descriptive, diagnostic, predictive, and prescriptive analysis to analyze data may help you see the big picture.
- Narrative: Used to explain data insights, the context in which they were collected, and the actions you advocate and want to inspire your audience.
- Visualizations: Visual representations of your facts and narrative to communicate your message clearly and memorably may be beneficial. Charts, graphs, infographics, photos, and movies can all be used.
Data alone is insufficient. To influence change within the company, you must be able to act on the data. It may be as simple as reallocating resources inside the company to meet demand, or it could be as complex as spotting a failing campaign and deciding when to pivot. In these cases, it's critical to convey a story with your facts.
Organizations' fundamental problem today is understanding and using data to benefit the business and, ultimately, the bottom line. You must be able to analyze data and make reliable business judgments. Then you will need the capacity to look at numbers and comprehend what they imply.
Maximizing the value of Performance Analytics
Your journey of using data to create a story is also linked to developing a data culture within your company. While sharing the narrative is critical, ensuring that the story is delivered to the correct individuals is essential.
The Data Analysis Process
Before data can be utilized to create a story, it must first undergo a transformation process to make it useable. The data is then sculpted into a story for research to aid in the critical decision-making process via reports. The data analysis process thus involves the following steps:
- Data Collection: The practice of obtaining data on specific variables recognized as data needs.
- Data Processing: The obtained data must be processed or structured for analysis. This includes reorganizing the data to meet the needs of the various Analysis Tools.
- Data Cleaning: The data that has been processed and arranged may be incomplete, duplicated, or include mistakes. The act of avoiding and fixing these problems is known as data cleaning.
- Data Manipulation: Data that has been processed, categorized, and cleaned is ready to be modified to make it more structured or simpler to understand.
- Data Modelling: Examining data items and their relationships with other things. It is utilized to look into the data requirements for various business activities.
How to Conduct Business Performance Analysis
Following the data analysis process, you must unpack the information presented in the modeled and manipulated performance data to draw insights that influence future decisions.
This is how you would go about it:
Analyze the variances
Variance analysis focuses on investigating the difference between planned and actual numbers. Companies evaluate the favourability of each item by comparing actual costs to industry-standard costs. The total of all deviations depicts the overall over-or under-performance for a certain reporting period.
Note any prominent substantial variations in proportion to the entire category or numerical terms. Then look at why the differences occurred. You could investigate external causes such as changes in supply market values, variations in material availability, seasonal fluctuation, and broader patterns such as weather or economic trends that may have impacted that area. Consider internal elements such as workforce availability, hours spent, process efficiency, technical capabilities, and external considerations.
Analyze Key Performance Indicators
Understanding your non-financial essential company KPIs can aid in the investigation of various reasons. You can comprehend steps of your manufacturing or sales process that do not immediately affect revenue and give more data about company performance by looking at process numbers and contact numbers.
It's critical to assess if you reached your objectives using the same criteria to forecast your outcomes. Depending on your business, these indicators may include the number of visitors to a digital or physical store, prospective sales leads, or communication with potential consumers. Other sales, manufacturing, and distribution indicators might assist you in identifying areas where your internal processes can be improved.
Review your Strategic Objectives
Outside of income and analytics, go above your initial targets for the year. This might involve objectives like developing a brand tone, communicating with consumers, or offering a higher quality of service. Examine how you achieved these objectives and what variables influenced your success or failure.
Examine the performance of your competitors
Examine how your rivals have done over the same period to put your company's performance into context. You may list your top rivals' unique strengths and weaknesses and any possibilities or risks they may represent to your markets or goods.
Examine the consumer and market environment
Examining the whole market and consumer behavior over time might reveal whether your product is satisfying demands and where you might uncover further opportunities. Take note of any changes that have occurred or impacted your consumer base, economic developments, market demand or supply adjustments, and any marketing plan modifications.
Make adjustments as necessary
The final stage in performance analysis is to figure out how to put the data from the study to good use to enhance your operations. Consider the causes for your success and how you may encourage it in the future when you reflect on times when you had a lot of income, great metrics, or completed your objectives.
Consider if the factors that caused you to fall short were within your control. If you have control over such aspects, you may build a plan to change your strategy, people, or procedure to affect them differently. Consider whether you can make your business more robust or agile in the future to deal with things like harsh weather, demand fluctuations, or economic catastrophes.
Yolanda Chimonyo is a Strategy and Performance Management Consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm.
Phone +263 242 481946-48/481950
Email: [email protected]
Visit our website at www.ipcconsultants.com
View Yolanda Chimonyo's full profile