The Big Data Wars – will your company prevail? Part 1

SUMMARY:

The winners and losers in the big data wars are already shaping up. What do they look like? We explore.

© Mark Carrel - Fotolia.com

There will be four kinds of businesses in the big data wars (and three of those are less than ideal!). Each has their own special set of attributes and likely destiny. The best way to handicap the future winners and losers is to see how well they stand across two perspectives:

  • Are they aggressively pursuing a more digitally intensive future or are they content to run their firm with the data they’ve grown so familiar with the last 4-5 decades?
  • Do they possess little or an abundance of information with which to guide their firm?

Let’s look at each of these four categories.

Runners and riders

4-kinds-of-big-data
via TechVentive – Brian Sommer

Losers – These firms couldn’t be bothered by the emergence of big data. After all, their firm never needed it before, so why should it matter now? These firms probably don’t do enough with their current data – more data would just create an inconvenience for them.

Recently, my business and personal bank asked me to drop in and discuss our ‘relationship’. Imagine my surprise that a bank that I’ve patronized for 26 years (and where I have numerous personal accounts, a home mortgage, business account, trust and other accounts) had no idea I possessed all of these accounts. If they had run a simple query in their current systems to see what accounts/instruments are tied to my address, they would have seen a screen full of business relationships.

This meeting only got worse. When I complained that my business account was now being hit with a lot of specious fees, the banker wanted me to provide him a report of this activity on my corporate account. Now, mind you, their bank systems have all this data but he couldn’t get it. Then the meeting took one of those Twilight Zone twists as we then needed three bankers in the room as each is responsible for but a sliver of my ‘banking relationship’.

This bank, like many firms, still has internal data locked up in silos. If they can’t even ‘see’ the portfolio of business they have with a customer, how bad would they mismanage big data? The answer is that they will likely never manage to use the data they already have let alone master the new, available data out there. This bank, with whom I’ll be severing ties soon, will be a loser in the big data wars. They’ll lose as they possess islands of automation, an inability to capture the full picture of their constituents (e.g., customers, suppliers, etc.) and no perceived interest in improving.

ERP Masters – These firms squeeze what insights they can from their internal, data-rich ERP systems but little else. These firms will fail for the simple reason that a world of insights exists beyond the four walls of an ERP system. I don’t care how phenomenal an ERP vendor touts their systems to be, the reality is that these products were designed to capture and report internal transactions. They weren’t designed to capture videos, buyer feedback, customer wants, sentiment, machine interaction, and more.

ERP products are great, albeit necessary, application software products but they are not the be-all, end-all of application software.

Slavish dependency on an ERP solution is like a drug addiction and drug addicts need interventions. A business simply can’t choose to ignore the great customer, competitor, market and other insights that abound in big data sources. Moreover, some big data (e.g., weather forecasts) has no home in a traditional ERP. Yet, some firms choose to ignore this data. Ignorance may be bliss in some personal situations but it can have ruinous results in business.

Wasters – These firms possess rich, big, external data but don’t do anything (or enough) with it. This is akin to a manufacturer creating internet of things (IoT) enabled products but not acquiring the computing capacity to do anything with this information. Some firms are even given ‘gifts’ like the consumer product companies that have the opportunity to parse point-of-sale (POS) data provided to them from their big-box retail customers.

I interviewed a manufacturer a couple of years ago that was stealing oodles of market share from competitors. They did so because they didn’t waste the POS data gift given them. When I spoke with them, they had already secured an additional 7-17 points of market share. Failing to use these big data gifts can spell a raft of misfortune. Don’t waste these opportunities – use them!

I suspect there are already of Wasters out there already. On a small data scale, Wasters are everywhere! For example, I’ve probably filled out warranty cards for 30 major appliances over the years. Yet, not one appliance manufacturer has ever reached out to me. Did they thank me for my purchase? No. Did they check in a year later to see how I was enjoying my dishwasher? No. Did they contact me five years later to see if I might be in the market for a newer model? No. These are firms that don’t even use ‘small’ data well. How can they take advantage of big data?

Winners – These firms know more, understand more and want more. Winners understand the fleeting nature of competitive advantage. They know that insights mean money, market share and margin. They also know that a competitor can come to the same conclusion, too, so they keep looking for more data and better data. Winners see victory as a continuous process not a one-time event. Their approach to using and acquiring big data reflects this understanding.

The activity quotient

one more dimension big data
via TechVentive – Brian Sommer

There’s another critical differentiator between the firms that will/won’t win the big data wars: the level of activity they’re expending to win the war.

Yes, this seems an obvious point but we should point out that smart firms don’t wait for others to solve big data or analytic questions for them. They don’t wait for someone else to acquire the necessary data. The winners are rabidly aggressive in getting the data, tools, people, etc. that will equip their firm for success.

This has several implications actually. One of the biggest is that businesses shouldn’t expect to buy completed applications that harness big data. If a vendor creates such an app then the competitive advantage would only go to the first firm that implements the solution. Being the second (or one-hundredth) firm to see a key insight will not provide competitive advantage at all. It might provide some measure of competitive parity if your firm is lucky. Getting old, secondhand insights from big data is about as valuable as acquiring a week-old newspaper. It’s too little, too late.

The winners will be the most aggressive seekers of insights within Big Data.

This observation has obvious implications to ERP and other application vendors. How can a vendor sell a solution whose ROI goes negative after the first sale? It is for this reason that a lot of analytic vendors choose to sell a toolset as opposed to a full-on application as the useful life of an analytic app can be short. Yes, the variability of the data coming into an analytic app can mean that new insights occur frequently. But, if every firm in your industry is using the same analytic app, then the only way to win with the app is implement the insight within nano-seconds because someone else is ready to do the same.

The winners see things others do not. They see with the tools and data others do not have.

In Part 2, I look at how the gap between winners and losers is widening and the critical components for getting onto the big data winners’ rostrum.

 

Image credit - Featured image © Mark Carrel - Fotolia.com, graphics via the author