Big data is revolutionising the way companies do business and looks set to open up further opportunities for growth, as Joshi Herrmann reports
Could big data be as transformative in the coming decades as the birth of mechanised industry in the 19th century? That’s the big question being asked by some who think the application of big data in the world of business will completely change how firms make decisions, define profitability and deal with staff.
“In the same way as the Industrial Revolution saw craftsman having their jobs automated, a lot of people who would consider themselves expert knowledge workers today will increasingly find their jobs automated,” says influential eCommerce expert Michael Ross, former chief executive of Figleaves.com and now chief scientist at consultancy eCommera. He thinks the use of data and resulting “decision science” will see “a very profound shift” in business practice.
“The data available now is in order of magnitude different to what companies had in the past, including, for retailers, essentially every touchpoint of every customer on every bit of your business – what products you look at, what you add to your shopping basket – all that is now available in very high quality and in near real time,” says Mr Ross.
David Richards, chief executive and co-founder of software company WANdisco, says the march of big data into the heart of corporate life owes more to the newly cheap and reliable avenues for storage than new monitoring gadgetry. “Data has always existed – like the BBC archives – but in the past we have thrown it away,” he says. “The driving force of big data is not technology, but the economics of data storage. Cell phones, lifts, doors and weather stations always used to throw out tremendous amounts of data every few seconds; we just never used to record it. Now we can.”
The use of data and resulting ‘decision science’ will see a very profound shift in business practice
Mr Richards believes companies will have no trouble finding ways to harness newly kept data to change the ways they work. “The really interesting thing with big data is when you start to make correlations,” he says. “Maybe your workers’ productivity falls when it snows and you should provide them with better clothes. It’s about arming people much better to make decisions.”
Big data will transform how companies measure success, adds Mr Ross. “Today, many don’t look at customers,” he says. “They don’t need to. They ask is this store profitable or not? But suddenly when you’ve got customers in your store buying from your website on their mobile phone, it makes no sense to look at store profitability. You start having to look at customer profitability.”
And online retailers will also be able to target their customers much more intelligently as a result of harvesting and using key data. Mr Ross says that, when a customer passes their “expected purchase point” (the interval at which they normally buy from the website), the retailer will be able to send them an e-mail either tempting them with a price-based offer, if they hovered over a product online, but didn’t buy it, or a stock-based offer, if they tried to buy, but weren’t able to. And the process can be automated.
Neil Cantle, principal and consulting actuary at Milliman, predicts that big data will allow firms to identify problems and costs they don’t currently spot. “A lot of people talk about data mining, but I think we need to focus on system mining,” he says. “We’ve had one client who was considering obvious factors like market falls or political fallouts. And actually through this type of thinking [systems data analysis], they saw that a sequence of relatively benign events was adding up to a significant factor.”
An early example of a company making use of a massive data stream is Temetra, which collects data from sensor networks, to collate information on how people use gas and water in their homes and businesses, giving them data every 15 minutes rather than once a year with a manual reading.
Stuart McCaul, business development manager for Basho, whose technology Temetra uses, says the more people use smart technologies, such as mobile phones and tablets, the more useful information companies can get to inform their decisions. Although he wonders “whether the average person is aware of the footprint that they leave with these sensors” and what the consequences of that realisation might be as time goes on.
WANdisco’s Mr Richards expects to see data experts in key positions in businesses before long. “I would expect to start seeing, on management team lists, somebody called the chief data scientist,” he says. “Data itself doesn’t mean anything unless you translate meaning from it. It doesn’t replace decisions, it improves decision-making. Companies no longer need to speculate ‘what if’ scenarios because data gives them answers.”