Features
Feature
Sea Change
Is your company prepared for the coming big-data wave?
by Steve Jones
Every business leader knows that in today’s knowledge economy, it is essential to take control of information to make decisions with confidence. The challenge is to quickly identify what should be retained, avoid duplication where possible, and make use of the insights being generated.
But the risk of making bad decisions based on poor information is increasing thanks to exponential growth in the volume and kinds of data needing to be translated into actionable insights.
This “big data” phenomenon is not something that companies can opt into or out of. At stake is greater insight into markets and opportunities—and that translates to big money. In its May 2011 report “Big Data: The Next Frontier for Innovation, Competition and Productivity,” the McKinsey Global Institute says the overall exploitation of big data will be worth trillions of dollars. Companies ignore it at their own peril.
Big data is not just about acquiring information from outside an organization; it’s about combining the data being created internally with external data. The union of these diverse data types provides the ability to ask questions about what will happen and receive more accurate answers than has been possible until now.
Harness the Explosion
Key facts about suppliers, products, materials, services, locations (physical and virtual), employees and customers lie within the data being channeled to companies every day. Companies must take control of these central pieces of information and develop the ability to identify them across any channel or source. Only then can a business exploit the information explosion instead of being saddled with billions of dollars in additional costs as a result of badly informed decisions.
To truly master its data, a company must implement rules and policies that provide control and consistency. Without these policies and controls—and an understanding of how a company will manage the data life cycle—the value of the information is massively reduced. Proper information management allows a business to enjoy the benefits of big data and allow it to realize its full potential.
3 Types of Control
Three different forms of governance are needed to leverage big data:
1. Standards groups define what “good” looks like. It’s important to get a broad consensus on what the major information types are (customers, suppliers, products, locations, etc.) and what constitutes a full or partial identification. Too often, organizations adopt a laissez-faire approach to these standards, with different areas of the business creating local standards. This means the information works fine if it’s contained within a business area, but this will not help the broad exploitation that delivers value. Standards need to be considered as a compliance practice, not as a series of IT guidelines.
2. Policy groups determine the most effective way for the business to implement these standards. Once standards are in place, the question is how they will be enforced efficiently. This is a question of policy. Elements such as product coding and hierarchies are ideally suited for outsourcing or offshoring, while more sophisticated business process outsourcing offers address the full suite of enterprise challenges such as supplier management, procurement, human resources and finance master data management. The point of policy, as with most compliance efforts, is to ensure that compliance to the standards is met at the minimal cost to the business. The advantage of mastering information is that you deliver the accuracy in business decision making that is a prerequisite in today’s market.
3. Validity of sources. The final question for a business is how much to trust a given set of information. When it meets the standards and policy criteria then the answer is clearly “a lot.” But what about the glut of peripheral transactions associated with that? A retailer should not base its procurement solely on the number of “likes” a product has on Facebook, but it might be appropriate to give this a moderate trust rating—say, 5%—when making such forecasts. The point is to ensure that everyone knows how different big-data sources should be used. This creates clarity for those making business decisions about how much personal judgment they should apply to what is presented.
The McKinsey Global Institute says the overall exploitation of big data will be worth trillions of dallars. Companies ignore it at their own peril.
Optimal Use
The mistake with big data is to simply consider it a pool of information from which general trends can be gleaned but specific actions cannot. For instance, approaches such as sentiment analysis look not at the specifics of your customers but at the generality of what people—who may or may not be your customers—say about your company or products.
This is like being given a choice between driving a Ferrari and pushing it down the road with a bulldozer. Sure it moves forward, but you are destroying its value while having a less-than-optimal experience. Big data can help identify trends, but these trends are more valuable when linked to your customers. Knowing that 10% of customers on Twitter complain about your company is important. Knowing whether this 10% refers to either your most or least valuable customers is even more critical knowledge.
The Operational Challenge
In the information age, companies often proclaim that business information is a major asset. But can your company look at the coming big-data wave and truly say that it is in control of it and can exploit it to deliver advantage?
Technology is only able to automate, store and query data based on the authority and quality given to it by the business. The onus is on business operations to take up the challenge of mastering big data. Now is the time to ensure that your organization is in a position to benefit from the explosion, rather than being a casualty of it.
Is your company up to the challenge?
Steve Jones is global lead for Master Data Management at Capgemini.