On July 12, David Gefen, Ph.D., professor of management information systems at LeBow College of Business, discussed “Uncovering Profitability Patterns: How CFOs Can Become ‘Data Detectives’ by Leveraging Informatics” at a CFO Alliance’s Philadelphia chapter breakfast session.
In his discussion, Gefen defined informatics and related terms such as data mining, data sifting and business analytics. According to Gefen, these terms describe analytics-driven, decision-making tools and processes that uncover hidden and irregular patterns and strategic insights in unstructured data that can provide financial savings and customer insights.
Informatics goes beyond spreadsheet analyses and linear correlations, he says. It applies database and statistical tools to identify the correlations that the data is telling. It can help companies connect the dots by answering questions such as “why are my customers leaving?” Gefen also provided a detailed informatics example involving vendor selection and marketing that provided unexpected insights into customer preferences and buying patterns in the software outsourcing market.
CFO attendees described how they used informatics with their current and prior companies and clients:
- To determine why customer usage is decreasing
- To uncover consumer purchasing patterns of buying a specific pair of items that provides demographic and time of purchase insights
- To build a ‘dashboard’ with key financial information and metrics
- To provide detailed vending machine sales diagnostics information such as knowing when a specific product and machine is empty and when a specific product is sold
The audience members also shared their key insights from using informatics:
- The data must be valid and the result is only as good as the data you have
- Be careful of the information you are looking at and the global conclusions you draw since the patterns may differ between various demographic and geographic segments
- You cannot solely rely on the data and you need to collaborate with other stakeholders (marketing, sales, IT, etc.)
- Each customer needs a different tool and tailoring due to their unique business and situation
After the large group discussion, Gefen emphasized that CFOs can gain more insights from their company’s information by having a “data detective,” currently one of the hottest new jobs in IT. A successful “data detective,” such as a price statistician, is someone who truly understands your business and can sift through volumes of data and find interesting correlations.