The power of big data in business
Over the past few years, the value of data has increased hugely because of our ability to utilise it in far larger amounts and analyse it with increased accuracy. Rob Clark, Senior Vice President, Epson Europe, takes a look at the rise of Big Data and how its use can reap rewards for savvy businesses.
One of the best illustrations of the power of Big Data in the business environment is the anecdote used by Kenneth Cukier, Data Editor of The Economist in London, in his speech at TED 2014, Big data is better data. Cukier poses a question to the mainly American audience: “What is America’s favourite pie?” Apple, the audience cries back. Cukier asks: “How do we know that? Because of data.” He goes on to explain that historic sales data shows that supermarket sales of 30cm frozen pies were dominated by apple-filled pies. But then supermarkets started selling smaller 11cm pies, and suddenly apple pies fell to fourth or fifth place. Why did that happen?
Cukier explains that through analysis of the original data – a small data set showing only supermarket sales of 30cm pies – apple pies come out on top. But when you add to that original data set the figures for the sales of individual 11cm pies – therefore increasing the scale and depth of the data from simple sales results to including data from which you can infer flavour preference – it shows that Americans will choose a different filling (their favourite) when an individually-sized pie is available.
Therefore, what this anecdote neatly illustrates is that from analysis of this ‘bigger’ data set we can make the assumption that families buying a single big pie will compromise on their choice of filling to make everyone happy, and we can also surmise that apple is actually America’s second favourite pie filling.
Big Data as a business tool
The apple pie anecdote demonstrates the key advantages of Big Data, but it also teaches a valuable lesson: the data discussed above is critical only to those who sell pies or are looking to start selling pies, no one else. The real power of Big Data lies in its analysis, subject as it is to the interests of its gatherers. Sticking with the pie example, it should not be inferred that Americans don’t like apple pies and that manufacturers should stop making them. What it offers is an opportunity for increased business through the creation of more pie flavours.
And this rings true for any manufacturer and seller in almost any industry. Epson uses Big Data – most commonly in the form of the purchasing histories of individuals using our online store – to predict our customers’ likely future purchases so we are better able to tailor our services to them. This strategy has enabled us to increase customer loyalty by using nothing more complicated than regular, targeted communications, such as direct marketing emails. The data has also proved extremely useful in informing the creation of new services and affecting the design of future products. Data analysis has enabled us to move from attempting to anticipate demands to delivering on them pro-actively.
Today, customers require a lot more information from the businesses they interact with, and the rapid spread of the IoT will create a new style of customer-facing analytics, specifically based on tracking where products go. This involves the embedding of basic sensors into all types of products to provide geographical and performance information. The resulting data will tell you what your product gets right, what it does not, and allow refinements to take place based on customer needs as they develop. It is this direct and almost immediate answering of customer needs that will set your business apart from the competition. You will have the opportunity to increase the transparency in your business and strengthen your customer and partner relationships through it.
The increasing reliance on Big Data for informing business strategies has also led to the rise of a new category of companies committed to providing cloud-based data sets that can be accessed at any time. This has happened because the data available in an organisation’s own storage is often not able to provide the kind of awareness and context to support decisions effectively, and the broad scope of externally accessible data is usually highly fragmented. Therefore, you need companies capable of providing data to fill the gaps. They know that your company’s biggest database isn’t your transaction list or internal databases, it is both of them combined with the internet itself and the incredible volumes of data now available from syndicated and open data sources. They will increasingly come to dominate the Big Data environment.
The major public concern about the collection of Big Data by businesses is the perceived threat to personal security and privacy. Essentially, what happens to the personal data we accrue? This is a perfectly valid question, but one that should be framed by perspective. Like many businesses, Epson collects data within strict guidelines, and we use it only to help us provide our customers with enhanced products and services. We have a recognisable brand and a trustworthy reputation of which we are proud. Our customers rely on us and our products, and we want them to continue to do so, which means we treat private data with the respect and care it is due.
The key to using Big Data in business will be knowing where and how to collect it and using it appropriately. We need to get better at it, and we are learning how to get better at analysing it every day. It will take time, but eventually Big Data will be a perfectly-integrated and ever-present tool.
With all of this in place, we will be free to break down the barriers of communication that a Big Data world will require. To make proper use of the large data sets we amass, we will need to collaborate with people who know how to analyse it effectively. In turn, the business world will need to collaborate with the people whose data we analyse.
In the Big Data world I see, we will advance our services and products through enhanced communication and collaboration; not because we aren’t already doing so, but because it’s the only way the business community has ever achieved great things together. Right now we stand on the precipice of a business world made even more transparent by the simple desire to serve our customers better through being pro-active. Big Data will help us achieve this goal, it is therefore our duty to use it properly.