Data sourcing: Key to decision-making

Data sourcing is an essential step in developing robust data-backed strategies. Gleaning relevant and accurate information entails verifying the authenticity of data and its source. Skipping this could lead to inaccuracy in data compilation, which would affect analysis. Hence, companies must understand the importance of data sourcing and plan it accordingly.

Technological advancements, advent of online businesses and penetration of internet across industries has led to the generation of massive data, which companies can use to derive important information and take strategic decisions.

For this, data building is essential. It defines how data is collected, stored, transformed, circulated and effectively used. It outlines the process to store databases, file systems and the procedure to create structured plans. The process is based on effectively leveraging the correlation between data and business strategy. Information architecture entails converting data into useful facts that the business can apply efficiently.

Companies have attempted to pursue highly consolidated, controlled approaches for data and information building. However, challenges pertaining to sourcing from authentic sources, accuracy and usefulness persist.

Unfortunately, data sourcing is frequently ignored, especially by companies that do not have a data warehousing background. They are unaware of the importance of authenticity of source. Validity and quality of data is crucial for any data warehousing project. Hence, it is essential that once received, data is cleansed and verified. Quite a few companies skip this step as they are more concerned with data entry application and do not feel the need for improvement.

Data sourcing helps in:

• Keeping a track of quality of data, veracity of source and functionality
• Checking performance, technicality and size

Data sourcing deals with reviewing different sources of data, analyzing the information and ascertaining its relevance for any business. A ‘Go/No-Go’ decision needs to be taken after understanding the significance of the data for the business. Challenge arises when too many third-party sources are available in the market. It becomes difficult for a company to gather data from every source and establish its relevance. Selecting the right source and using its data in the best way is of utmost importance. Incorrect decisions due to faulty data can impact a company’s strategic and long-term plans negatively. Sourcing right data helps a firm to take correct decisions which fulfill its objectives and satisfy all stakeholders.

Case Study
The following example emphasizes the importance of data source verification.

A private investment firm usually focuses on partnering with management teams to build leading companies. Investment firms seek companies with potential to grow either organically or via acquisitions. They usually target firms with focused management, and strong offerings and cash generation prospects.

To make the right strategic decision, a private investment firm requires specifically curated information around performance of CEOs and their background. As this information is generally present on multiple channels, it is imperative to select only those that are authentic. For professional data, the websites are:

• LinkedIn
• Bloomberg
• Capital IQ
• Reuters

Further online search is carried out to reconfirm and add details.

It must be understood that important investment decisions will be based on this analysis, which, in turn, will depend on the data sourced.

Once the relevant data is sourced from different websites, each data point needs to be reviewed for the respective CEO against the scoring criteria; thereafter, a rating is given. A private investment firm would generally like to work and invest in high performing CEOs. So, it is critical to have a robust evaluation mechanism before the final report is prepared.

Conclusion:
The source of data is crucial as the quality of information depends on it. Businesses depend on data in making strategic decisions that directly impact their plans, objectives and operations. Hence, accuracy of data cannot be compromised. In fact, data sourcing is the first step in data analysis on which the rest of the analysis is based. Therefore, it is imperative that the source is evaluated and verified before the process begins.