Many companies today do not have a Big Data strategy. And many senior leaders have yet to grasp the significance of what seems to be a purely technology wave. But the hype is hiding the emergence of a new opportunity to base management decisions on objective insight and unprecedented detail. By ramping up their marketing to target their traditional customers in IT departments the global technology companies are missing the target, since the initiators of Big Data projects are non-technical managers who are generally alienated by technology hype.
Despite the many ‘What is Big Data’ articles, no consistent definition has emerged so far. But this doesn’t matter – what is more important is the potential for this emerging technology to transform the way management is performed in large enterprises and to change the battleground for the hearts and minds of consumers. For those who are considering adopting it, defining Big Data by reference to how it improves enterprises is probably more useful. Five key areas of application include Revenue generation and business model development, Cost containment in real-time, Realtime forecasting, Tracking of physical items and Reinventing business processes. Once these areas of impact are understood then the identification of the different sources of Big Data becomes more meaningful.
Vast quantities of measurements from cheap, internet-connected sensors can now be captured at modest cost – such as those that enabled UK retailer Tesco to learn that many of its food chillers in its 1,800 stores had been running at too low a temperature. 70 million data points were translated into a saving on the company’s electricity bill of 20%. Whether this Machine-to-Machine (M2M) data is collected from refrigerators, jet engines, vehicles or oil drilling rigs, the ability to collect it analyse it and use it to improve business is compelling. Just as useful is the operational data such as supply chain, financial transactions or website behaviour, that many companies already use to ‘run’ their business at the transaction level, but can – once aggregated, and with the right tools – yield up new insights to better ’manage’ their business. The traditional record of a purchase, the humble till receipt, has now been replaced by a long trail of website visits, online comparisons, social media interaction and in-store browsing leading up to the actual purchase.
This is the key to the value of Big Data – the ability to combine large volumes of data in new ways to find unexpected patterns. Traditional analysis tools (Business Intelligence or BI) have been used for years to derive insight from operational data – but these tools generally analyse the past rather than the present. Big Data tools operate on far larger volumes of data (and more types of data) to provide the basis for “Real Time Analytics” (necessary to not only detection fraud but also to block a transaction as it is being made), ‘Predictive Analytics’ (that sends out a repair engineer before a generator fails) and even ‘Prescriptive Analytics’. The distinction here is that Predictive analytics might help you understand the drivers behind customer buying patterns to anticipate the products customers want, whereas Prescriptive analytics actively incorporates management decisions into predictions, for example helping optimize scheduling, production, inventory and supply chain design to deliver forecasted purchases in the most optimized way.
All of these examples are based on data that is easily managed by computers, but the emergence of Social Media offers a tantalising new opportunity as ever more fickle consumers turn increasingly to their friends and online forums to make purchase decisions. Brands have attempted to launch their own messages into this medium but with little success, and consumers now prefer to complain about brands on Social Media rather than contact customer support. So the capture and interpretation of these brief messages – ‘Social Media Listening’ has become crucial for reputation management, product launch and customer service- extending beyond just Marketing into many other functions. New technology approaches are required to filter and derive meaning from ‘free text’ data sources such as Twitter that generate 5,500 messages each second.
Far from being a ‘Technology wave’, Big Data looks more like a ‘Business Transformation wave’ in which the collection, analysis and interpretation of vastly more data than before is now possible, and in a far shorter time. The users of this data are in fact unchanged – they are the functional and business managers and the executive teams who now find themselves with a more powerful telescope (or perhaps microscope) to understand the influences within and outside their business.
This leads us to the most important element of Big Data adoption – people – and the changes in management behaviour that it will drive. ‘Gut feel’ will gradually be overtaken by a more ‘evidence-based’ culture that will require different behaviour right up to the boardroom. Organisations that consider data as a ‘corporate asset are already outperforming their competition. New skills and job roles will emerge to support and drive this process, and the more visionary CEOs will realise that executive sponsorship is vital for those first steps that their company takes in Big Data.
Enterprises are starting to get results from Big Data – incremental ROI of 241% objectively measured . So most forward-looking CEOs and Senior Management teams will now be laying the foundations for a Data-Driven future. “Big data has changed the C-suite entirely,” said Shawn Banerji, Managing Director at Russell Reynolds Associates, a New York-based technology recruiter. “Reliance on empirical data is in. Going with your gut is out.”
To download a complete copy of this CEO Report on Big Data, click here. Published by Mike Fish, director of noted Big Data Management Consulting firm BigData4Analytics Ltd, this Masterclass is intended to provide non-technical CEOs and senior executives with the information they need to make decisions about a significant change in the nature of competition that is starting to affect businesses of all kinds.