Jan

4th

Using Database and Software Technology to Improve Your Business

Software | Website Development


Summary: This article is about using database and software to model and extract meaningful information from your business.  Many companies miss opportunities in communicating with their clients, and gathering valuable information from their business that can importantly advance the prospects of their business in a very cost effective manner.  The adoption of enlightened information technology using database technology and custom software in a business levels the playing field, and enables smaller companies to neutralize advantages enjoyed by their larger and more established competitors.

In 1949, Charles Goren published his seminal work, ‘Point Count Bidding’, in which he described a method of evaluating Bridge hands for playing and bidding.  Goren’s ‘Point Count Method’ revolutionized Bridge playing for the rest of the century, and was the basis for an entire contextual grammar that the best teams used to describe their hands to each other.  Elegant in its simplicity and powerful in its approach, the method evaluated cards by assigning ‘points’ to the highest cards, and additional points to short suits in a hand.  Players would then translate those point counts into the native language of the game so partners could in a concise and precise manner, describe their hands to each other and arrive at the best fit in the bidding.  The system made Goren the most successful and best known professional Bridge player of all time.

Bill James

Bill James

Bill James had an early interest in baseball.  After graduating from the University of Kansas in 1973 with degrees in English and Economics, he set about publishing an annual book called The Bill James Baseball Abstract.  The annual was published from 1977 until 1988, when he stopped to write more pointed books and articles on baseball, as well as new annuals about baseball.

Both of these guys are notable for bringing numerical analysis to bear on importantly refining the knowledge of their business.  In Goren’s case, he collaborated with several others – another bridge player, and an actuary –  and built a system based on empirical observation and experience.  James used computers and statistical analysis to accumulate, evaluate and formulate his ideas.  He was not immediately accepted by the baseball cognoscenti.  While he was doing his work, he was working as a security guard at the Stokely Van Camp, and, after all, what could a security guard possibly know about baseball?

But his work gained acceptance because his conclusions were statistically verifiable.  See, Bill had data processing capabilities that allowed him to go back in time, and pose questions, and challenge assumptions that had long been held in the industry.  He was able to quantify, for instance he defined the concept of secondary average:

SecA = \frac{TB-H+BB+SB-CS}{AB}

where

  • TB =Total Bases
  • H =Hits
  • BB =Walks
  • SB =Stolen Bases
  • CS =Caught Stealing
  • AB =At Bats

This measures a hitters total contribution by including his walks and net stolen bases.  Another concept he pioneered was the Runs created measure of performance, which, he suggests, is a better measure than the normally used RBI:

RC = \frac{(H+BB) \times TB}{AB+BB}

where H is hits, BB is walks, TB is total bases and AB is at-bats.  In both of these indicators, Bill reevaluated the contribution of walks in baseball offense.  This was significant in that a player who got relatively fewer hits, but drew a lot of walks were valued by the baseball market at a lower price than their contribution.  James demonstrated that these hitless wonders who drew walks were almost as valuable as the ones who hit a lot of singles, but could be had for far less salary.

He had a number of such axioms which applied to pitchers, formulae for equating minor league performance to major league expectations, and many others.

He was hired by the Redsox in 2004.  Many think he was a decisive factor in the Redsox winning the World Series in 2004 and 2008.  The previous Redsox victory in the World Series was 85 years earlier.  He advised the management on what mix of pitchers to hire, was a main proponent in hiring David Ortiz.  He’s concerned about such things as where players normally hit balls, who can take advantage of Fenway’s close-but-tall Green Monster Wall in left field, which pitcher/catcher team allows fewest steals.

Now those numbers were available to anyone for the past 100 years.  But until the computer age, they were available in an unusable form.  And it took Bill James to shuffle and deal those numbers and experiment with them to bring about a more meaningful and productive way of using them to benefit the industry, and various teams in it.  He had not an impressive resume, nor exceptional intelligence.  But he was a man with a passion for baseball with the statistical and computer skills he needed to apply to his favorite sport.

Many businesses have analogous situations to baseball before Bill James.  They have the data, but perhaps it is not in usable form.  Raw accounting reports are not very useful because by reporting on P/L and taxes accrued they are like the won/lost major league standings records: they report on what has already happened.

A proper managerial accounting system should allow you to collect data by product.  Which products are you selling and to whom? When to they sell best?  How do they respond to different advertising media and themes? How do sales of each item respond to news items? What industries buy your products?  Does your system allow you to get and process feedback from existing customers?  Can you segment and analyze your different products/markets?  Can you easily share pertinent information among different departments in your company?  Can your prospective customers find you on the internet?

If your business is typical, there are literally hundreds of questions and answers you should be mining from the data and computer records you already likely have!  And if you are not recording this information in a usable form, the gain from making a change will be paid many times over in a smaller or more productive workforce, better information, better sales responsiveness, happier customers, better product feedback, more effective advertising and marketing, and on and on and on.

How about interacting with your customers?  Can they order online?  Can they get return authorizations? Can they make suggestions for improving the product?If you have a large company, can you effectively communicate with your employees?  (Not by sending an email to a few, but broadcast changes in policy?)  Changes in individual retirement, or other benefit plans?

We have a long history of doing similar projects with a wide variety of companies.  Solutions typically involve a capable database management system, user friendly software tailored to the demands of the individual business, and a consultant who can listen and quickly understand the demands of your particular business.  Adoption of techniques such as these in your business plan allow your business to compete more effectively, even though your competitors are larger in size and capitalization.

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One Response to “Using Database and Software Technology to Improve Your Business”

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