The article was published in TODAYonline on 23 November 2015.
Businesses around the world already know the importance of big data. But not everybody knows what to do with it.
A 2014 survey of 144 major multinational corporations, commissioned by KPMG, found that more than half the respondents had already changed their business strategies to incorporate big data, which are extremely large sets of data that can be mined for useful information.
They were increasing their capacity to collect, store and analyse big data, and training key personnel to use it for decision-making.
Investors are also fans of big data. A 2015 study by Institutional Investor Research found that out of more than 250 investors and sell-side analysts surveyed, 62 per cent were more inclined to invest in a company that uses big data to improve its performance or achieve its strategic objectives.
But while big data is becoming increasingly ubiquitous, many companies appear unsure how to put it to good use.
Almost all the respondents in the KPMG survey felt that they had not fully tapped the benefits of big data. Nearly half said they had trouble integrating data technology into their existing systems and business models. Many were not sure what kind of data they should collect. What they did collect, they were unclear on how to analyse and interpret.
The trouble is many business leaders still tend to think of big data as a tool for achieving specific objectives, such as reducing operating costs or bringing products and services to market faster. But its true value is far more fundamental — and comes from integrating it into business strategies and using it as a core component of operations.
FROM TOOL TO INSPIRATION
Companies need to incorporate big data into their strategic business thinking. For example, they should ask what information they need to better execute a certain strategy, or to perform better overall. They can then actively focus on gathering and analysing that information.
Big data is exceptionally useful in the retail industry and other sectors where consumers’ preferences are linked to their behaviour.
By using it to identify and understand customers’ demand very quickly, companies can tailor their products and services to more closely match consumer expectations and thus compete more effectively. This may be as simple as providing online shoppers with suggestions for products they may like, or as extensive as developing the capacity to provide a service that business partners may need in the near future.
Big data is fundamentally changing the way in which companies compete. In the future, big data will most likely become the primary basis of companies’ growth. The most innovative companies develop their product and derive growth strategies from the insights they obtain from big data, including social media data.
One European manufacturer of women’s clothing, for example, uses photographic data collected from social networks to identify popular designs and colours in real time. The company then brings these designs to market while they are still popular, managing this in a fraction of the time that department stores would take.
Another unlikely area where companies can use big data is in talent management. US company Cornerstone OnDemand, for example, uses big data to predict, based on a wide range of factors from economic conditions to social media usage, when and why employees are most likely to leave their jobs. Employers then have the opportunity to address the issue before it becomes a problem.
Big data makes information transparent and usable in much larger quantities and at higher speeds. It allows companies to carry out faster, more accurate forecasting and market analysis. Furthermore, it reveals opportunities that companies may otherwise have missed out on.
To get the most out of big data, companies must have not only the right technology in place, but also the right talent. They will need trained analysts who can identify trends that are relevant to the business, or that may affect the business in future. They will also need managers and business executives with the skills to then use this.
Today, big data has already become the foundation of many new and innovative business models. For example, the crowd economy (or crowdfunding sites) has disrupted traditional systems and facilitated the progress of open business models. Crowdfunding is a way for businesses and organisations to raise money in form of donations or investments from multiple individuals online.
In Singapore, homegrown company Crowdonomic is a professionally run reward-based crowdfunding service that helps entrepreneurs address their funding needs. The company helps entrepreneurs open a business idea to a wider audience and get market feedback. It is a sustainable and efficient way to build a business.
As companies step up their efforts to recognise and take advantage of the opportunities inherent in big data, such questions are only the beginning. In the future, companies will be able to create entire new business strategies based on the answers to those questions.
The article is contributed by Mr Lyon Poh, head of Digital + Innovation at KPMG in Singapore. The views expressed are his own.