Today I attended a cutting edge event in San Francisco which was hosted by The Economist, the publication’s third annual Ideas Economy: Information conference. The theme of this year was ‘finding value in big data’, specifically how ‘businesses and organizations of all kinds can harness the world’s avalanche of information to unlock new forms of economic value’.
Big Data is one of the hottest terms in the Information Technology world right now, and with good reason. It will fundamentally change society and business in exciting new ways that we are only just starting to perceive. The industry is just scratching the surface of what’s possible today. Here are some of my thoughts on just how much it will impact us:
Big Data, Big Potential – Playing The Numbers Game (& Winning)
Big Data will equate to big change, but many have yet to appreciate just how big. Senior decision makers get the technology’s potential. Research indicates that 90% of business leaders view it within the same critical category as land, labour and capital. Financially it has been estimated that Big Data could help create a $600 billion annual consumer surplus globally from using personal location, while retailers might boost their margins by as much as 60%.* Retail is a viciously competitive and margin sensitive environment, so even a few percentage points of growth can mean the difference between survival and decline. This kind of margin growth will be truly transformative – and essential to survival in an increasingly competitive (and fractious) global economy.
From Shadowy Silos to an Interconnected World
The IT world has long grappled with the challenge of business silos – semi-closed off business units using IT and processes which are interoperable with their sister units. This problem can make communication and collaboration across a business very difficult. Some technologies such as Service Orientated Architecture (SOA) have helped address some of these issues by knitting together disparate and unconnected technologies. However, for a variety of reasons, there still remains a wealth of information that sits out of reach in siloed data warehouses. Big data will shine a light into the darkest corners of these warehouses – connecting data sets across them – giving us an interconnected, reliable and real-time view of the business and its performance. This will allow customers to build products and services that just weren’t possible before.
Fighting Fraud With e-Fraud Smarts
Fraud prevention is just one area where an interconnected approach will drive new services within businesses, but it’s a powerful example. The rise of digital commerce and e-tailing is a great opportunity for businesses. It also poses some substantial risks from a fraud and security perspective, risks that won’t go away anytime soon. The good news is that by using the power of e-fraud analytics – online retailers can proactively identify threats and fraud. The benefit of this kind of application cuts across all vertical industries – retail, finance, manufacturing and so on. For example, with analytics in place a bank would know immediately that the debit card for one of its customers had been used at an ATM in one city only minutes before it was used for an Amazon transaction in another. Analytics will help connect those pieces of data to create a real-time response to potential fraud. Powerful stuff indeed.
Gaining Competitive Advantage from Early Mover Adoption
Big data is a new technology, and as a result there is still a lot of curiosity among customers about how it actually works in practice. Companies who adopt the technology early on will face a definite learning curve as teething issues are identified and solved. This process is natural and happens with any new product or service. The advantage of working through these teething issues is that they will gain a head start on competitors who have been slower to adopt – in some cases this may even tip the balance regarding a company’s business survival.
Data Practice Makes Data Perfect
As to what Big Data ‘looks like’ in practice, here are some examples of use cases we’re seeing:
- Know Thy Customers – By using the intelligence of Big Data, businesses can make informed decisions whether it is about making the right promotions at the right time or gaining a more granular view of strategic customer segmentation. Essential for any large, complex business.
- Loyalty Through Tailoring – Familiarity breeds insight, which is essential to anticipating and understanding customer perceptions and actions. Companies can capitalize on this by building a holistic profile of their customer and tailoring services in a way that increases loyalty. Because Big Data is accretive, and gets smarter in increments, every byte matters.
- Keeping Talent, on a Budget – Finding, hiring and retaining talent is vital to any company, but it’s especially true in the sporting arena. Using Big Data a sports team can employ computer-generated analysis to acquire new players in the most cost effective way possible.
It’s worth reiterating that we’re just undertaking the first few steps in an epic journey. It’s amazing to look at how far we’ve come and how much further we can go together. My team and I are keen to hear your thoughts on this journey too – either regarding today’s fascinating discussions here at Ideas Economy event, or about the Big Data opportunity in general.
You can reach me via my Twitter handle @JohnMichelsen
Source: *McKinsey & Company – Big data: The next frontier for innovation, competition, and productivity