The Strategy of Big Data

November 7, 2012
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Facebook was once again front and center in the news as its number of worldwide users eclipsed one billion! When Facebook is the news, the focus is often on the ever-present conflict between the social network and its users in regards to invasion of privacy. What I find more compelling, however, is how interwoven Facebook’s market value is with its ability to capitalize on “Big Data” technology.

Facebook was once again front and center in the news as its number of worldwide users eclipsed one billion! When Facebook is the news, the focus is often on the ever-present conflict between the social network and its users in regards to invasion of privacy. What I find more compelling, however, is how interwoven Facebook’s market value is with its ability to capitalize on “Big Data” technology. With 85% of its revenues derived from advertising, a significant amount of Facebook’s competitive advantage lies in capitalizing on the immense amount of information it collects. Last year, according to their public filings, they translated that advantage into a whopping $3.7 billion in revenue and over $1 billion in net profit.

Putting the privacy dispute aside, Facebook is one of the most obvious examples of a company with an effective Big Data strategy. Google is another clear and obvious case study. But to most of us the scope of a Big Data initiative is daunting—the cost seems prohibitive and the return is nebulous. Yet more and more companies are beginning to internalize the concepts and recognize the business opportunities in collecting, processing, and analyzing wide varieties of both public and private data:

  • A whole host of software providers in the CRM and campaign management space are incorporating Big Data concepts into their products. Vendors such as SAS, Teradata, and Sitecore are helping companies target customers based on information harvested from sources such as Web analytics software, social media, and point-of-sale systems. The gaming industry has long been a leader in this, using data captured on the casino floors to track customer tendencies and to target them accordingly. Now, the value of marketing analytics has become more prevalent and spans virtually every industry.
  •  Companies such as Walmart, Amazon, and Gander Mountain use Big Data to analyze customer tendencies, predict inventories, streamline logistics, and optimize their supply chain.
  • A recent Wall Street Journal article highlighted another innovative use of Big Data—in human resources! The article describes how Xerox analyzed data patterns that were common amongst its most successful employees and then leveraged that information to screen candidates and make hires.

Big Data is a technological tool that is quickly becoming a sought-after and multifaceted way to achieve corporate goals. The data is readily available and the benefits of capturing it and making effective use of it are clear. However, it would be a serious mistake to embark on a Big Data initiative without a clear objective, as there is always a risk it will become a costly, resource-consuming failure.

Like most technology solutions, Big Data should be viewed simply as an accelerator or enabler for the achievement of a specific goal(s) within a corporation’s long-term strategy. Successful technology projects rarely start with implementing the technology with the belief that the benefits will be obvious and manifest themselves immediately upon completion. Never ask, “How could the accumulation of large volumes of data help my business?” Rather, focus on the business strategy and ask, “What information would allow my business to achieve our goals more rapidly and effectively than we are today?” If the answer involves harvesting data from disparate internal and external sources—and the collection, storage, and analysis of that information is economically feasible—then an investment in a Big Data initiative is the right solution.

If you are interested in exploring the possibilities further, contact us to discuss the options that make the most sense for your business.

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