How to Effectively Unlock the Value of Big Data

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Data is the new oil
According to the networking giant Cisco, data is seen as the same transformative, wealth-creating power that 19th century visionaries once senses in the sensed in the crude black ooze trapped underground. If “crude” data can be extracted, refined, and piped to where it can impact decisions in real time, its value will soar. And if, data can be properly shared across an entire ecosystem and made accessible in the places where analytics are most useful, then it will become a true game changer, altering the way we live, work, and play. Image courtesy- Cisco
A Capabilities-Driven Approach to Unstructured Data Is Key to Outpacing Competition
With unstructured information set to reach close to 8,000 exabytes by 2015, Booz & Company evaluate the strong need for companies to enhance their capabilities system so as to effectively unlock the value of big data  

Today, concerns about privacy are lower than ever before. Unstructured data – stemming from online behavior, purchases, mobile devices, location tracking, sensors, and other sources – has been growing at a rate of more than 50 percent per year. As a result, companies are positioning themselves to compete based on their access to and use of big data. In line with this, Management consulting firm Booz & Company have found that – for companies to truly gain a competitive advantage in the marketplace – they must adopt a capabilities-driven strategy. 

The amount of data available to businesses – from sensors, accumulations of digital text and video, electronic transactions, observed online behavior, and other forms of recorded activity – has grown significantly over the last few years. Today, leaders in many industries are looking to gain valuable insights through the gathering of big data; they believe that it will lead to more intelligent decisions about which customers to target, how to target them, how to price, what products and services to launch, how to manage risk, whom to recruit, and much, much more.

However, to date, very few enterprises have found a way to embrace big data in a manner that yields better business results within a practical time frame. This gap between concept and practice reflects the notion that big data is still a relatively new functional specialty, and that there is much to learn about its real-world use and value.

“In order to achieve this, CIOs mustn’t solely consider an IT strategy, they also need to focus on the strategic priorities and value propositions of their company, and gain awareness of how these tools might fit,” said Olaf Acker, a Partner with Booz & Company. “They should evaluate their company’s overall strategy – and, in particular, the capabilities system that can help it reliably and sustainably outpace its competitors – to see what contribution big data can make to it. Then, they should put in place the processes and practices that best fit the purpose of the enterprise.”

A Conundrum of Choice
In our digital world, a significant part of big data growth is unstructured; it consists of material including Web content, news and social feeds, message board postings, video clips, and other data that cannot easily be grouped into recurring fields. In reality, the data from location-aware mobile devices has exacerbated the overall amount of data, and the types of data, to be gathered. We are truly looking at a data deluge never seen before.

It is understandable that many CIOs and business executives resist jumping in to make major investments in this opportunity. They are wary of adopting another “intellectual” initiative or repackaging their traditional business intelligence and data mining efforts under a new buzzword.

Hence, most CIOs are torn. Should they embrace the big data trend? Or should they wait for the hype to settle down and risk losing competitive edge to other industry players? 

In making that decision for their enterprise, there are four fundamental questions that CIOs must ask, and largely in this order: 

1.        How does this technology fit with our strategy, and especially with our capabilities system? 
To define big data in an actionable way, it is critical to understand what data sets are relevant to your enterprise – and especially to the drivers of its capa­bilities, and therefore, its profitability and growth. 

In effect, the universe of possible data to consider can be divided along two dimensions: data type (from tightly structured to loose and unstructured) and data source (from internal to external). Different types of information will be valuable to dif­ferent companies, based on the purpose of the enterprise.If your biggest areas of growth and strategic focus are linked to internal and external unstructured data sources then pursuing a big data strategy may be right for you. 

For business-to-consumer companies, external unstructured data offers the largest area of opportunity to discover new consumer insights and ultimately transform products, marketing, and customer engagement strategies. In the business-to-business world, inter­nal unstructured data is a prime learning ground for enterprises to understand how to mine value from unstructured data formats. 

2.        Where and how can we put big data to use? 
You can find the most value in big data in functional areas such as customer and marketing analytics, electronic media analytics, operational effec­tiveness, performance management, and fraud and risk management. The fact is, to uncover the full value of big data, you should focus on the business needs of your company and customers.

Although identifying the right use for big data is pivotal, it is equally important to clearly define expected outcomes and benefits from pilot initiatives – in a quantifiable and verifiable manner. 

3.        What tools do I need to buy, build, and implement? 
When looking for big data tools to implement, a CIO must first transform the enterprise’s information manage­ment technology stack to include non-relational databases, new data distribution architecture, in-memory processing, machine learning-based analytics, business-process man­agement software with embedded analytics, bi-directional real-time data provisioning to channels and interac­tions, full population analytics, and so on. 

This presents a paradigm shift in the way information should be managed to make big data useful and fully integrated into internal information environments. Indeed, there are several choices in the marketplace for investing in the rapidly evolving big data technology stack; and, each of these technologies and related products can be adopted in different ways, depending on your business needs and capabilities.

For most companies, the best way to start is with a small, niche-oriented, and flexible approach.

4.       What aspects of our operating model need to be in place?
Successful execution of a big data road map requires an operating model that incorporates the right skills, practices, processes, and funding patterns. The business leaders need to understand the value of data and how it can enable the strategy and winning capabilities system. 

More so, there should be technology experts who know how to collect, organize, structure, and store data for use. You also need “usage” experts, sometimes known as “data scientists,” who can bridge the business and technology areas and know how to architect big data, use the data, create required insights, and embed the insights into operational business processes that enable the target business capabilities. 

On their part, CIOs should balance recruitment of external new hires (data experts) and internal resources (IT and business requirements experts) with selective use of service providers for high-end data analytics to bring in complementary capabilities and build out their teams.

“Interestingly, big data could also mean the beginning of a shift in the role, or the expansion in remit, of a CIO,” added Acker. “Slowly, more and more technology executives are realizing that their firm’s success is dependent on the analyses of the information the company collects and manages, while the technology management part gets commoditized or outsourced. In the future, the role of a CIO could get bifurcated into the role of a chief strategic information officer and a chief technology officer.”

To conclude, the next decade of competitive advantage and productivity improve­ments will increasingly involve highly “intelligent” technologies and processes that digitize, analyze, and assimilate the ever-growing realm of data at speeds never seen before. Enterprises that embrace this fact early on will have a head start over their rivals to drive newer growth opportunities. CIOs have a tremendous opportunity with big data to be champions of a technology-driven growth strategy for their organizations. But this requires having a clear understanding about the relevance and complexity of data in their organization and how it can transform business processes or help build the winning capabilities needed. The margin for error in this highly competitive market landscape is small, and so, CIOs would be well advised to craft a win­ning big data agenda that is aligned with their enterprise’s capabilities-driven strategy and core strengths.

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