Sunday, January 9, 2011

Data Resolution

It's that time of year that numbers-oriented business folk like myself love the most: that period of contemplation, circumspection, and strategizing that falls between the end of the year and April 15th.  It's a reckoning of sorts...sifting through data from the year recently closed and comparing it against the data of the year before that, often trying to find a pattern where, invariably, no such pattern exists.

While the architecture of your data system might not say as much about your company as who you hire, it isn't far behind.At some point we'll go into detail about the business systems used to collect and sift data in detail.  For today, though, I just want to hit one specific part of data collection: selecting a desirable point of data resolution, or deciding what you keep and what you chuck.

Data has become the "it" commodity of the new millenium.  As of today, the world values Google at approximately 197 billion dollars...largely because of the amount of data that flows through their computers.  Hastened by services like Craigslist (think personals) and Facebook, data has graduated from the mundane school of phone numbers and addresses, and has evolved into the fledgling empirical representation of our desires and our psyches.  This is heavy stuff.  This is a marketer's dream.

Alas, the data we discuss today is the old-school type: numbers associated with small business.  Considering the value that the world places on data, one might think that it is best to collect as much data from your business as possible.  Compelling arguments can be made to that end.  After all, you never know what you might learn from exhaustive data until you see it, right?

The problem is that it takes time and energy to collect data accurately.  Even more, it takes time and energy to analyze data.  Data sounds so important...it's easy to get caught up in data collection, often to the point that you wind up neglecting truly critical parts of your business.

I like to remember that data is a TOOL.  If the tool becomes more work than the job it is intended to do, then the tool has gone too far. 

POS (Point Of Sale, not the other colloquial POS...) computerized cash registers in use at most coffee joints are able to provide users with scads of minutae.  The problem is that most of that data is useless.  Just because you CAN collect exhaustive data doesn't mean it's a good idea.  One customer proudly showed me how his system can tell him how many shots of sugar free vanilla syrup he sells in any given time period.  And it does the same thing for his other 16 syrups too. 

I asked why he doesn't just open up a new bottle when the old one is empty.  Nobody in the coffee business makes money off of syrup (with the possible exception of Starbucks, but they're more in the syrup business than the coffee business anyway...).  So who needs that data?  It's a bunch of numbers that probably distract him from other numbers that DO mean money.  For instance, the fact that his POS system costs him $120 a month.

The cash register we used at Kaladi for nine years came out of a dumpster.  Literally.

When deciding what data to keep, ask yourself how hard it is to collect that data.  As yourself what it might tell you about your business.  Ask yourself how it will help you manage your business better.  If you can't come up with a good answer for any particular little bit of belly-button lint data, it should probably be allowed to fall away.

Next post: data retention at Kaladi Coffee.

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