Big data: do you see things big?
Source: ‘Bij de zaak’ – May 2014; Bank J. Van Breda & Co newsletter
Big data is big business. A large amount of data can be used to extract useful information. The data is made available by large data platforms, such as Google Analytics. Social media and mobile internet have generated a second popularity wave for big data. Professor Stijn Viaene explains why and how you can use this data.
“The time has come to consider the use of big data. Today, value can be unlocked from big data through a combination of four technologies that are readily available on the market: mobile, social, database and cloud technology. You don’t necessarily need to invest in it yourself, and that’s precisely what makes it interesting. Third parties offer both the data and analysis possibilities via your browser. That is a real revolution: accessible big data analysis at a variable cost.”
What can an SME use big data for?
SV: Big data is potentially interesting in all decision-making processes, both at an operational and a tactical level. Usually such decisions are based on assumptions. Having a large amount of data at your disposal allows you to test these assumptions against the available information. It also enables you to work out scenarios. Of course, data cannot serve as a replacement for human decisions, but it does strengthen the input and validation capacities. People are still required to interpret this data. An example is the use of analytics for digital marketing. Google Analytics is a useful tool for every SME with a commercial website, as it helps optimise customer loyalty. Marketing is no longer a one-way bet. When you launch a campaign you get feedback that can be used to tweak your communication. Targeted advertising, which focuses on a particular target group, yields better results. You could also perfectly predict which products customers intend to purchase by profiling their search behaviour. That could prove interesting for real-estate agents, for example, as it would allow them to find out whether customers are planning to buy a property and if so, which market segment they are interested in.
Four advantages of big data
1/ A different decision-making culture: decisions can be better substantiated through data-driven analyses.
2/ Business model innovation: to offer new and separate values through collaboration with other parties.
3/ New opportunities: in the field of service provision and product sales.
4/ Intimacy: to build a closer relationship with your customers rather than a bond based merely on products and services.
Is it a major investment?
SV: There are two possibilities. If your SME is IT savvy, you can create your data platform yourself. Another very popular option is to appoint external data and software-as-a-service providers who can also take charge of the data analyses. That does not require any major investments, because you pay a variable fee per marketing campaign or transaction.
How can an SME get started?
SV: My suggestion is to launch at least one strategic experiment to assess what big data could offer your company. In doing so, rely on an external service provider for assistance. If you decide to work with big data you can’t just go into it blindly. The use of big data will change your decision-making process, so you should make way for innovations in your organisation. You can entrust third parties with the analytical part of the process. Subcontracting has become part and parcel of business. However, you will also need at least one person in-house who has experience in decision-making based on data. If you’re thinking of outsourcing analyses you should have a look at magazines like DataNews or CxO Magazine. Surf to websites of companies mentioned in articles or find references by networking with competitors and colleagues. Go to the websites of the service providers involved and look for customer references. Then make a few phone calls: a first-hand recommendation is always the most efficient route.
How should an SME deal with privacy issues?
SV: You shouldn’t rely only on the privacy legislation. The main aim is to build a relationship of trust with your customers and business partners. Carefully consider how your customers want you to handle their data. They need to feel that you use their data to their advantage and that you process it ethically. It is important to highlight this in your branding strategy, as it will allow you to gain even more trust from your customers.
Dos and don’ts
- Don’t see investments in big data as IT projects. Set clear targets with regard to business impact and work towards achieving them.
- Big data is largely about innovation. Consider it a long-term learning experience rather than an investment with a short-term yield.
- Use software as a cloud-based service to avoid major investments in technology.
- This is not traditional outsourcing. Work closely with your external partner to ensure you effectively enrich your knowledge via data analysis.
- You cannot achieve added value without changes to your business culture. Develop a culture where data-driven decision-making is the norm, not the exception.