It is not a new idea that company decisions are being driven by data analytics. Since many decisions are driven by trends noticed in data, companies are becoming data focused. This causes companies to believe that the more data they have, the better off they will be in decision making. This leads them to gather data on just about anything they can. Unbeknownst to them, this idea has its shortcomings. In order for the data to be useful, it must be sorted. When there are astronomical amounts of data, the sorting process can be very complex and time consuming. The time required on deciding what information is needed and then organizing the data to run the analyses may take longer than the time they have to make the decision. This issue encourages companies to reach out to third parties for their data.
In addition to internal data being complex and time consuming, it may also leave gaps. These factors provoke companies to branch out and include external data when running their analyses. The data received by third parties can cover different demographics, weather patterns, company information, and beyond. Since many companies are integrated with others through partnerships and supply chains, they are affected by factors outside of their company. They are affected by those in their networks as well as economic, political, and environmental factors. By gathering outside data, you get a better look into possible opportunities your business could benefit from or show you risks that could have a negative impact on your business. Markets are constantly shifting due to consumer’s behavior and trends they exhibit. Companies are constantly trying to stay ahead of their competitors in order to maintain their market share. By blending the internal data a company has with the external data they can receive, businesses are able to figure out what information they need in order to get the results the hope to achieve in a timely manner.
The benefits of using external data are numerous. The external data has allowed companies to personalize their marketing offerings, produce new revenue streams through the creation of new products or services, mitigate risk, anticipate demand and trends, and track retention rates. Surprisingly, it can also benefit farmers in granting them the ability to predict crop yields based on their location and weather patterns. Data is very complicated, however when it is used correctly, its pros definitely outweigh the cons.