Big Data is the New Oil
"Big Data is the new oil”.
This is a quote which is quite often heard these days, but what does it mean and how relevant is it in a business environment! In essence the industrial economy was lubricated by the use of oil, but the em
erging services based economy will be ‘lubricated’ by data … lots and lots of it.
Big Data Analytics has now become the ‘new normal’ amongst very many firms. It has become mainstreamed in order to find an edge over competitors.
My firm has been involved in many Big Data analyses for a range of companies from large to small and across many sectors. Based on this experience I identify four main areas in which Big Data Analytics can play a significant role.
Understand your Customers
Firstly, getting a better understanding of existing customers. Delving into an existing customer base normally involves using the company’s own data as a basis, but in many cases linking this data with other data which is out there in the public domain or which can be secured by agreement from other companies. I am often surprised by how little companies actually know about their existing customers. What should be done to retain existing customers or to extend the range of products or services which they consume from the company are all legitimate questions to be addressed in a Big Data Analytics exercise.
Identify New Customers
Secondly, identifying new customers, or even new whole market segments would normally draw on somewhat different datasets, more often than not government data or other data which is readily available for download into one’s own data bases. Company growth very often relies on targeting new consumers or less often new whole markets.
Develop New Products & Services
Thirdly, developing new products or services. This often involves not just identifying new customers or markets but also in many cases involving product development based on improved understanding of physical, biological and chemical relationships which underpin the performance of the product. In the case of services, better understanding of economic, political, demographic and social processes can provide a much sounder basis on which to develop new offers. From our experience Big Data Analytics can play really important roles regarding both product and services development.
Fourthly, finding ways in which to improve efficiencies. In this case there are two main focus areas, namely, internally within the business itself, and secondly in the supply chain which is involved in the provision of goods or services. Efficiency gains even if they are in the few percent range can make significant differences to the bottom line.
All businesses are concerned with Return on Investment (RoI). Let’s take an example from a large financial institution which has say €1 billion turnover each year and has say 15 million clients. If through Big Data analysis of its current customer base it can gain insights which result in the provision of new or improved products or services to these clients which result in a 2.5% increase of turnover (entirely possible) this would increase turnover by €25 million. If the analysis cost say €200,000 then there would be a 125 times return on investment. Big business and Big Data Analytics for them are one thing, but Big Data Analytics can be beneficial in significant ways to small businesses as well, including for example new start-ups which are trying to understand their potential market and to develop a business plan based on factual conditions.
From our experience RoIs in excess of 10:1 are frequently the case.
Before ending this blog I have to make mention of a critically important issue, namely, privacy. The power of Big Data Analytics to integrate and interrogate data from a wide variety of sources may open large scope for stepping over legal and moral lines and into untoward invasions of personal privacy. We in our company are extremely vigilant in this regard and have instituted layers of checks to ensure that the line is not overstepped.
Big Data analytics is here to stay, and in my view offers really significant new opportunities to better the human and environmental condition. Let’s creatively and energetically exploit the positive opportunities opened up, while being very aware of the possible privacy and other potential pitfalls.
Carme is a co-founder of Synergic Partners, a strategic and technological consultancy firm founded in 2007 which specialises in data management and analysis. Carme has more than 20 years experience in the IT and telecommunications fields. Her company was acquired by Telefonica in 2015 and now operates as a specialist unit within the larger company. Synergic Partners undertakes many Big Data analytical projects for companies in a wide range of domain areas. The company currently has 120 staff and has its main offices in Madrid and Barcelona.
Posted: 05/02/2018 14:59:33