Data Driven Decision Making

Batch 20-22
All Questions Carry Equal Marks (10 each)
Q.1. Explain the concept of Data Driven Decision Making. Justify your answer
with appropriate examples.
Data-driven decision making (DDDM) involves making decisions that are
backed up by hard data rather than making decisions that are intuitive or
based on observation alone. As business technology has advanced
exponentially in recent years, data-driven decision making has become a much
more fundamental part of all sorts of industries, including important fields like
medicine, transportation and equipment manufacturing. Businesses generally
use a wide range of enterprise tools to get this data, and to present it in ways
that back up decisions. This is in stark contrast to the way that decision-making
had been done throughout the history of commercial enterprise, where before
the presence of new complex technologies, individuals often made decisions
on the basis of observation or informed guesswork. In order to serve this
booming demand, companies have come out with self-service data analytics
products – the idea is that self-service products lead to more egalitarian data
collection and transfer. In other words, without self-serve tools, only a skilled
data scientist can crunch the numbers and come up with the data supporting
decisions, where with decision support tools that are self-serve, executives and
others who are further from the IT department can do their own analysis and
present their own decisions backed up with the data in question. Consider
Netflix, for example. The company started as a mail-based DVD sharing
business and, based on a data-driven decision, grew to internet streaming—
becoming one of the most successful companies today. Without data, Netflix
would not have had the basis to make such an immense and impactful
decision. Moreover, without that decision, the company would not have
flourished at the rate or in the direction it did. Without the data-driven
approach to decision making, Netflix would still be mailing you an outdated
mode of movie content and Amazon would be a simple online bookstore. The
bottom line is that this data-driven approach is putting all other methods out
of business. The world is becoming data-driven, and to not make data-driven
decisions would be foolish.
Q.2. Discuss the various steps in Data Driven Decision Making.
1. Identify and Refine Business Questions: It’s not difficult to come up with
business questions that relate to overall strategies and goals. What’s difficult is
translating those general questions into concrete actions. It starts with
identifying those key questions and refining them into analytical questions,
something you can quantify and measure. Here’s an example of translating a
business problem into an analytical question. How do we decrease churn? How
can we drive growth by increasing the average customer lifetime value? From
there, you can develop a predictive scoring model that measures the likelihood
of losing a customer at a specific point in their customer journey. But before
you get to that point, you need to find the right data.
2. Find the Right Data: Big data isn’t always the best data. When targeting
information to assist in strategic decision-making, it’s critical to stick to only
the bare necessities. Any fluff in the data and you risk compromising your
eventual decision. Get input from other department heads and decision-
makers. By widening your search, you can more effectively narrow in on what
information is the most important.
3. Clean and Analyse the Data: Once you know what data you’ll be using, you
need to ensure it’s accessible, trusted, and in the right form. Whether they’re
internal or external data sources, data quality needs to be checked and
doubled-check for effective analysis. Inaccurate data can lead to the wrong
decision. Once your data is cleaned, it’s time for analysis. Drill down and
through those metrics to get at the root cause. Once an insight is uncovered,
try and disprove it. Challenging the data can help you spot inaccuracies or
inconsistencies, and will ultimately strengthen your decision. Finally, leverage
your analysis with your own personal experience and gut feel.
4. Create a Story: Data is most useful when it’s digestible. When creating your
business report to present to stakeholders and key decision-makers, consider
what data visualizations best represent your argument. Use storytelling
techniques like the pyramid principle to give your report an easy-to-
understand flow which will help in garnering support. Your Business
Intelligence tool should allow for pixel-perfect reporting and offer a robust
selection of data visualizations. It should also allow for easy sharing through e-
mail, PDF, and more.
5. Act: You’ve garnered support. The decision has been made. Now it’s time to
act on it. But to be a data-driven company, it doesn’t end there. Set up a
review process to monitor how your decision is impacting your business.
Continue to leverage that data to further refine the decision-making process. It
should be a continuous cycle of analysis, decision, and action.
Q.3. Explain the various sources of data that can be used for decision making.
Justify your answer with an appropriate example. Using internal and external
data is an essential element in good decision-making. Companies that use
more internal and external data sources possess a greater range of possibilities
for data analysis.

Q.4. Justify the role of Information technology tools in Data driven decision
making.
As access to data and tools for data analysis become easier, higher education
institutions can utilize data to acquire insights and improve various aspects of
their organizations, including recruitment and retention of students, optimizing
classroom schedule, tracking and measuring student performance, and
improving operations and saving cost. e, IT is emerging as owning data-related
issues and business owns the business questions. Collaboration between the
two groups—critical for becoming a data-driven organization—is also
improving. Information Technology (IT) has made a direct and positive impact
on corporate decision making. Companies have found uses for IT systems as
they have developed and become readily available as well as viable. More
specifically, firms have found applications of IT for their enterprise decision
making requirements. As with any IT system, the users and managers hope to
find a fruitful use of the resource. There are many examples of IT systems that
successfully support decision making in the corporate arena. Other IT
capabilities that are not normally considered to be a distinct DSS do support
the decision-making function within organizations. These include data access,
collaboration functions, and e-commerce. A manager needs access to data in
order to provide information on which to base his/her analysis and resulting
decision. Putting that data and analysis tools in the hands of the manager is
part of the decision-making process. Managers today have access to more data
at a faster rate than ever before in any industry. Many IT assets provide the
managers with access to the data and with the performance to get data at
rapid speeds. For instance, the Internet offers a wealth of information. A file
server provides an excellent central repository for data with many gigabytes of
file storage. A modern desktop computer can store more data than a file
server could just five years prior. The role of IT in decision making has become
more important than ever before as companies are provided with a wealth and
breadth of information as a result of IT resources. The positive impact of IT has
also been noted in the application of various decision support systems.