A business report is a document that conveys precise information that guides action and improves value. The data conveyed in business reports depends on the audience, the purpose, and goals. But the best business reporting is interactive; allowing individuals users to change the level of analysis, data range, and other key elements necessary for them to derive insights. However, business reporting all comes down to effective communication of key metrics that build insights and highlight actions that generate higher ROI or reach other major goals of your business.
Making sense of business reporting
Business reporting software helps you create any type of report you require. On the surface, this type of report is important for communicating any type of data about your business. In the digital age, unlike reporting before the rise of digital, we’re drowning in data and have too few insights.
Problems with big data
The amount of data created in the world is increasing rapidly, reaching 64+ zettabytes in 2020 (a zettabyte is 1021 bytes of data), according to Statista. From an analysis standpoint, there’s no computer in the world capable of analyzing data with the following characteristics:
- Velocity – every day, users upload 900 million photos to Facebook, which is only 1 tiny example of the amount of data uploaded every day. Add to this the amount of data posted on other social networks, sensor data generated by millions of devices reporting back to a human (IoT), medical data from patients and laboratory experiments (the genomic results from all those Ancestry.com orders), government and business process data, and much more that are uploaded every day.
- Volume – notice the exponential growth in data ever since 2006. Estimates suggest we generated 40 zettabytes of data in 2020.
- Variability – this may be the biggest challenge to creating reports since data comes in so many formats. We have great tools for analyzing numbers, so making sense of Google Analytics is relatively easy. Analyzing other types of data isn’t easy as we don’t have the tools able to go much beyond sentiment analysis when it comes to analyzing text without the tedious, time-consuming process of having a highly trained individual develop insights. Analyzing other common types of data, such as images and video is nearly impossible to accomplish at scale.
- Questionable veracity – data quality is always an issue of concern. For instance, my Google Analytics and my Google Ads show a different number of visits to my website, which always made me nervous. Quantitative data should have reality behind it and everyone should get the same number of visits.
KPIs or key performance indicators represent metrics that correlate with success, whatever your goal. You might have KPIs that represent bottom-of-the-funnel success, such as conversions, AOV (average order value), or even subscribers. You also have top-of-the-funnel metrics, such as visits, enter a product in the cart, pageviews of landing pages, etc. Business reporting focused on KPIs offers insights that might increase revenue over time if you make the right decisions using these insights.
Then we have vanity metrics. Don’t get me wrong, there’s some value in higher numbers on these metrics but the relationship is tenuous and not proportional. Thus, if I increase visits by 10% and my conversion rate is 2%, I increase my revenue by 0.2%. However, increasing the number of fans on Facebook or Twitter followers might generate no additional revenue because there’s no measurable relationship between social media fans and revenue. Instead, the value of a fan is a function of a myriad of other factors.
If you’re interested in some KPIs relevant to your social media, I curated a list along with additions from others interested in this topic. Scroll to the bottom of this post for my list and feel free to add your own favorites.
Types of business reporting
Businesses create a lot of reports for the purpose of problem-solving. They are used to present any vulnerabilities or issues found within the company. For instance, a report might highlight late deliveries to retailers who sell your product. Knowing that a certain store frequently experiences late deliveries helps find a solution to the problem.
You can also use a report to show your business’s current performance against KPIs to measure how effectively you are at achieving your goals. Financial reports are important for a number of different reasons. Largely, they are written as a statement for advisers, but their functions extend a lot further than this, such as to obtain financing or ahead of planned public offerings (stock). Many companies create reports at the end of the fiscal year to assess their performance and plan for their needs next year.
Reports are also needed for health and safety. No one likes to think about getting a serious injury at your place of employment, but it can happen. Businesses need to ensure they uphold their responsibility to keep records on this and use these records to identify safety issues so they can put training or new operating procedures in place that avoid injury. For instance, Amazon uses a system similar to the one used to capture actors for video games to understand their movement. Recently, Amazon redesigned the handle location on their bins to make it easier to pick up without twisting and eliminate a worker’s ability to raise the bin over their head, which might result in injury.
IoT devices report their operations back so companies can monitor performance and identify problems before they occur. For instance, tracking a device overheating allows the company to shut the device down before it’s damaged or hurts someone else.
What to consider in business reporting software
Buying business reporting software is complex, but you can reduce complexity by organizing your decision. You simply need to know the important aspects to consider when looking for the best reporting software for your business. That is exactly what this post aims to assist with. So, continue reading for everything you need to know.
Know your needs
The most vital thing is to make sure the business system you implement will offer you a return on investment (ROI). This can be something that is difficult to calculate, but the following points should help lead you in the direction of software that ensures you make back the money you spent plus more.
- You must select a system that is easy to use.
- The software must also be compatible with the existing systems you’re already using. Otherwise, you can’t collect critical data effectively in one place.
- Data volume is another area of consideration. How much data does your company have? How much of it will you use in the future? You need a solution that is scalable to your requirements.
- Finally, functionality is crucial too. It is not about finding the software with the most features; it is about finding the software with the killer functionality that’s oing to give your business the platform to gain a competitive edge.
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