In this guide, we’ll explore what this means for local businesses in Tennessee, Kentucky and Indiana. Whether you’re an established construction firm or an up-and-coming startup in an emerging market, the data already resident in your business has the potential to be transformative––once you understand how to leverage it.
Read on to learn about:
- Data Analytics: An Introduction
- What Are Data Analytics Services?
- What Are The Benefits of Working with a Data Analytics Service?
- Types of Data Analytics Services in
- Data Analytics Services
- Data Visualization Services
- Financial Planning and Analysis (FP&A) Services
- The Importance of Data Governance
- Legal Requirements for Data Governance
- Data Governance Technology Compliance Services
- The Role of SOC 1 and SOC 2 Examinations
- How Businesses Can Get Started with Data Analytics
- Create an In-House Data Team
- Work with a Data Analytics Service
- Finding a Data Analytics Service
- LBMC: Your Data Analytics Service in Tennessee, Kentucky, Indiana, and Beyond
The goal of this guide is to provide business leaders with an in-depth overview of the power of data analytics and an actionable strategy to start harnessing the power of this data in their business while remaining in compliance with relevant regulations.
Data Analytics: An Introduction
Data analytics is a comprehensive field that focuses on identifying trends, patterns, and insights in large, complex datasets. These datasets could be anything from sales data for every product your business sells to your business’s financial records. By analyzing these datasets, businesses can unearth new knowledge that exposes hidden inefficiencies and identifies growth opportunities.
Successfully translating these raw datasets into tangible business outcomes demands expert knowledge and experienced leadership. All firms have data: few have the infrastructure in place to enable them to effectively harness it.
The past couple of decades have seen new business units and roles emerge: data science, business intelligence, and more. New technologies, including Artificial Intelligence (AI) and Machine Learning (ML), have gained prominence, enabling businesses to analyze their data more effectively. Countless software tools exist that promise to help businesses better organize and interpret their data.
Together, all of these professionals, technologies, and processes make up the field of data analytics. It’s an area that’s growing fast: studies forecast the data analytics market growing at a rate of nearly 30% a year over the next decade.
Today, all of the world’s most successful businesses actively leverage data in meaningful ways. If your business doesn’t have a comprehensive data analytics strategy, you’re not just at risk of falling behind––you’re already behind.
One way you can catch up with the competition?
Working with a data analytics service.
But what exactly do those services offer, and what benefits do businesses stand to gain from partnering with one?
What Are Data Analytics Services?
Data analytics services, also known as data advisory services, work closely with your team to help unlock the power of the data already resident in your business.
When you partner with a data analytics service, the engagement is often completely customizable. When it comes to data analytics, every business is different: there are varying levels of maturity, differences in the existing infrastructure, and unique goals for every project. Because of this, it’s important to work with a data analytics firm that offers a bespoke approach designed for the needs of your business: not a pre-packaged service.
A data analytics service offers both experienced advisory teams and best-in-class technology. The advisory team will collaborate closely with the leaders of your business to determine the most appropriate strategy and will then oversee the design and implementation. You can also expect them to train your team members on all new technologies.
Alternatively, some businesses may choose to outsource their data analytics process entirely. Outsourced data advisory teams can build and maintain dashboards, reporting systems, and other tools that offer your business all of the benefits of data analytics without the need to do any of the work in-house.
What Are the Benefits of Data Analytics Services?
Data advisory services serve one clear purpose: to help your business unlock the power of its data. Your business already has a lot of data––it’s just not using it to generate insights that can shine a light on a better path forward.
Harnessing your business’s data can have a significant impact on every area of your business, influencing both major strategic decisions and routine everyday tasks. What does that impact look like in practice? Let’s take a look at the top three benefits of working with a data analytics service.
Unearth Game-Changing Financial Insights
Your business’s data is a treasure trove. By learning how to structure, analyze, and interpret it, leaders can develop a wide variety of new insights that have the potential to have a transformative impact on the business.
There are countless examples of this in practice. Perhaps you discover that the vast majority of growth in your business is being driven by a particular product line and decide to double down on that product. Or maybe you use a Financial Planning and Analysis (FPA) tool to better understand cash flow challenges and build a strategy to improve the collection of receivables.
Enable Higher Confidence Decision-Making
If a business lacks the capacity to understand its data, leaders are forced into making every major decision without being able to see the complete picture. By contrast, working with a data analytics service helps businesses foster a data-centric culture that puts data at the heart of every major decision.
Access to real-time, highly precise data enables leaders to make every decision with a much higher degree of certainty. That leads to more efficient resource allocation, helping businesses invest in growth opportunities that move the needle.
Embrace Next-Level Storytelling
Data analytics isn’t all about numbers: it’s a new way to tell stories. Unearth golden nuggets that capture the attention of your target customers. Display trends visually with dashboards that update in real-time, advanced data visualizations, and more.
Effective storytelling is at the heart of all great businesses. Creating a powerful, data-backed narrative around important issues helps your business attract new customers more effectively, align employees on strategic initiatives, and build better relationships with investors and other external stakeholders.
Types of Data Advisory Services
Data is a broad field. There are a wide variety of service providers that businesses can work with, ranging from pure-play data firms to accounting firms with well-established data advisory practices.
Some vendors, including LBMC, offer all of the services outlined below. This is often the most optimal solution, enabling businesses to put together all the pieces of the puzzle, rather than working on one-off projects that only affect one area of the business.
The types of data advisory services available to Kentucky and Indiana businesses include:
- Data analytics
- Data visualization
- Financial planning and analysis
Let’s take a closer look at what’s involved in each of these services so that you can start to determine which of these options represents the best fit for your business.
Data Analytics
Data analytics is the process of collecting, organizing, and analyzing raw data to produce conclusions about the meaning behind the data. The practice can be applied in several different ways, including:
- Descriptive: helps leaders understand exactly what happened. Example: how many units of a product were sold in the previous quarter.
- Diagnostic: helps leaders understand why something happened. Example: sales were down 15% because a competitor released a new product.
- Predictive: helps leaders understand what might happen next. Example: sales for the next quarter will be down 25% as the competitor’s product gains more distribution.
- Prescriptive: helps leaders understand what they should do next. Example: in response to competitor activity, you should run a sale on your own product to defend your market share against the competitor’s new product.
Data analytics helps business leaders understand what happened, why it happened, what’s next, and what they should do about it. It’s also frequently used in the audit process. The practice of data analytics serves as both a magnifying glass and a crystal ball, helping executives learn from the past and build stronger strategies for the future.
Data Visualization
Data visualization is the process of conveying the insights contained in your data in an engaging, visual format that’s easy for people to understand. Data visualization services can take many forms, from creating real-time financial dashboards that illustrate a business’s current position to helping executives create charts for board presentations.
The practice of data visualization is heavily dependent on software platforms such as Tableau and PowerBI. Mastering these tools is vital to creating meaningful visualizations. There is no shortage of ways to display your business’s data, including charts, graphs, maps, and more. Choosing the right medium is key to effectively communicating the insights contained in your data analysis.
Financial Planning & Analysis
Many businesses analyze their historical performance, but far fewer leverage this data as part of a wider FPA process that takes a proactive approach to anticipate future trends.
Successfully using FPA as part of your business’s financial planning processes requires two things: a custom-built FPA tool and a team of accountants and financial analysts that know how to leverage it.
Many financial planning and analysis tools, including LBMC’s FPA platform, are turnkey products that take a standardized approach to integrate historical data and forward-looking forecasts into one central platform. Financial analysts work within this tool to analyze data, identify trends, and recommend data-backed financial strategies that enable businesses to hit their goals.
Larger enterprises may have in-house FPA teams responsible for this; a resource that’s likely out of reach for small to midsize businesses. For these organizations, working with an outsourced FPA team enables leaders to recognize the same benefits, often at a fraction of the cost of building an internal team.
The Importance of Data Governance
Data is an extremely powerful tool for businesses to leverage, but depending on the type of data you’re working with, and the industry you operate in, your business may be subject to various legal standards.
Embracing robust data governance policies ensures that your business remains in compliance with all relevant regulations. It’s important not only to protect your data from internal misuse but also from external attackers. Many cybersecurity attacks result in data breaches. These can have extremely damaging consequences for businesses, leading to lasting reputational and financial damages.
With such high stakes, businesses must understand their data governance obligations and invest in the infrastructure and technologies required to secure their proprietary data.
Legal Requirements for Data Governance
Depending on the industries and locations your business operates in, there are various legal standards that you may be required to remain in compliance with. They include:
- General Data Protection Regulation (GDPR)
- California Privacy Rights Act (CPRA)
- Health Insurance Portability and Accounting Act (HIPAA)
- Fair Credit Reporting Act (FCRA)
- Children’s Online Privacy Protection Act (COPPA)
It’s likely that your business may be required to comply with these standards, even if on first impression, it seems they don’t apply to you. If your business has any customers in California, for example, you must comply with the CPRA, even if you’re based thousands of miles away in Kentucky or Indiana.
To determine which legal standards apply to your business, it’s best to consult with a data advisory service provider with experience navigating these regulations.
Data Governance Technology Compliance Services
Once you’ve determined which of these laws apply to your business, it’s important that you take steps to rectify any existing practices which may be in breach of the regulations. To identify current issues in your infrastructure, consider conducting an IT audit that establishes areas where your business may be exposed.
The Role of SOC 1 and SOC 2 Examinations
If your business routinely deals with the data of other businesses, it’s not uncommon for these partners to request your business undergo a SOC examination. Examples of this might include a software company that hosts the data of their customers, or a manufacturing firm entrusted with proprietary designs for their client’s products.
There are various types of SOC examinations, but the two most common are SOC 1 and SOC 2 examinations.
SOC 1 Examinations are less to do with data governance, and more to do with the internal financial controls of your business. They are typically requested by banking partners and auditors.
SOC 2 Examinations are much more focused on the way your business handles confidential data. They assess the security controls your business has in place relative to five criteria:
- Security
- Availability
- Processing Integrity
- Confidentiality
- Privacy
Customers often request SOC 2 examinations from their vendors. If you need help bringing your business up to SOC 2 compliance or need a SOC 2 examination that attests to the strength of your data protection policies, the team at LBMC can help.
Learn more here: What Are SOC Examinations (And Why Do They Matter?)
How Businesses Can Get Started with Data Analytics
With so many options, it can be difficult to know where to get started with data analysis projects. Should you set up some data visualization dashboards or invest in FPA tools that enable better budgeting and forecasting? Or perhaps you’re concerned about compliance and want to make sure your business is on a firm footing there before investing in any new initiatives.
It can be easy to overthink the process of getting started with data analytics. The reality is that if you have a proven team of experienced practitioners, they will be able to guide your business toward success. When it comes to building out that team, businesses have two options: creating an internal team or working with a data analytics service.
Create an In-House Data Analysis Team
Establishing an internal data analysis team is an attractive proposition. After all, the importance of being data-driven in the business world isn’t going away anytime soon. Building data literacy across your business and fostering a data-centric culture will clearly continue to play an important role in years to come.
Many larger businesses build out their own data analysis teams, but this isn’t always achievable for smaller, more agile businesses. A data analysis team likely represents a major investment: you have to hire well-qualified staff and support them with a wide range of technologies.
What’s the best approach for your business? Let’s take a look at the advantages and disadvantages of building your own team.
Pros of Creating an In-House Data Analysis Team
There are a couple of main advantages to building an internal data analysis team:
- Control: it’s easy to oversee an in-house team. Anytime someone from your business has a question, they can simply walk across the office and ask the data analysis team.
- Security: keeping all your business’s data in-house can be more secure than sharing it with an external partner, provided you have adequate security controls in place.
Cons of Creating an In-House Data Analysis Team
While an in-house team offers several benefits, there are also some drawbacks to be aware of:
- Investment: building out an internal team represents a major investment. Per hiring site Indeed, the average salary for a data analyst is $73,797. Expect to pay a six-figure salary for top talent.
- Hiring Challenges: data analysts are extremely in-demand professionals. Career site Zippia ranks Indiana and Kentucky as the 36th and 41st best states for data analysts, making hiring talented data analytics professionals difficult for businesses based here.
Work with a Data Analytics Service
The alternative to building an internal team is to work with a data analytics service provider. These vendors provide some or all of the services listed above, offering businesses the ability to outsource their data analytics needs to a team of proven experts. They typically offer a systematic approach that uses proven frameworks to deliver meaningful insights for your business.
There are some drawbacks to be aware of but with the right approach, it’s possible to mitigate these and work toward success. Let’s examine the pros and cons of partnering with a data analytics service.
Pros of Working with an Established Data Analytics Service
There are many advantages to working with a well-established data advisory service, including:
- Proven Processes: firms that provide data advisory services will likely have a track record of building data analysis platforms and capabilities for other businesses like yours.
- Domain Expertise: the professionals that work for these services work in data all day, every day. They stay up-to-date on the latest technologies and best practices and infuse those into your business’s operations.
- Cost Savings: working with an outsourced data analytics service tends to be far less expensive than building out an in-house team, and businesses are able to scale the scope of the service up or down as required.
Cons of Working with an Established Data Analytics Service
While working with a data analytics service is typically a great fit for many small to midsize businesses, there are some potential disadvantages to keep in mind:
- Lack of Control: if you work with an outsourced service, it’s not as easy to get a quick answer to a question. You might have to send an email or schedule a meeting. Additionally, an outsourced team will not understand the intricacies of your business as well as an internal team would.
- Security Concerns: there is always an element of risk in adding an external vendor to your business’s internal systems. However, if you vet potential partners thoroughly to make sure they have good security practices in place, you can reduce the chances of any incidents occurring.
Finding a Data Advisory Service in Tennessee, Kentucky and Indiana
Few data advisory vendors are solely focused on serving businesses in the Tennessee, Kentucky and Indiana region. Most firms tend to be more national in scope, serving a wide variety of clients from across the country. Unlike service providers like tax advisors, data practitioners aren’t required to understand any state or local regulations and therefore tend to operate on a larger scale.
However, there are great options for Tennessee, Kentucky and Indiana businesses, including LBMC: a full-service accounting firm with a well-established data advisory practice.
LBMC: Your Data Analytics Partner in Tennessee, Kentucky, Indiana, and Beyond
At LBMC, we’re proud to offer a wide range of data advisory services to businesses in Tennessee, Kentucky, Indiana, and beyond. As a full-service accounting and advisory firm with over 40 years of experience partnering with local businesses, our team is uniquely well-placed to help businesses harness the power of their data to unlock game-changing insights.
Our Data Advisory Services group, provides a wide range of solutions closely tailored to the needs of our clients. Together, we’re passionate about helping businesses unearth actionable insights that boost performance, improve profitability, and usher in a new era of growth.
Interested in learning more about how our Tennessee, Kentucky and Indiana based team can help your business unlock the power of its data? Contact us today.
