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Reading: Do Customers REALLY Want to Know What’s Inside the Black Box?
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SmartData Collective > IT > Cloud Computing > Do Customers REALLY Want to Know What’s Inside the Black Box?
Business IntelligenceCloud ComputingData WarehousingInside CompaniesSocial Data

Do Customers REALLY Want to Know What’s Inside the Black Box?

paulbarsch
Last updated: 2011/06/01 at 2:18 PM
paulbarsch
4 Min Read
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From politician salaries to calorie counts on restaurant items, “transparency” is a key buzzword in government and business circles. However, high interest in cloud computing, data warehousing “to go”, and other analogous concepts beg the question of whether customers really want to peer inside the black box or whether an opaque approach works best.

From politician salaries to calorie counts on restaurant items, “transparency” is a key buzzword in government and business circles. However, high interest in cloud computing, data warehousing “to go”, and other analogous concepts beg the question of whether customers really want to peer inside the black box or whether an opaque approach works best.

Editor’s note: Paul Barsch is an employee of Teradata. Teradata is a sponsor of The Smart Data Collective.

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Increases in the call for transparency are legion. Health inspectors post food safety grades for eating establishments. Websites track lists of political campaign donors. And restaurants redesign bars, kitchens, and more to show patrons how drinks and meals are prepared. All this, in order to give customers a window into processes for product and service creation.

And to be sure, there’s definitely even more opportunity for transparency in product creation, especially in financial services. As an example, Michael Lewis’ Big Short cites how via the securitization process, hundreds of subprime mortgages were packaged up and divvied into “tranches” of investment quality. Through securitization, it was tough to estimate the contents of a particular asset-backed security. One hedge fund manager exclaimed; “I didn’t know what the (expletive) was in the things. You couldn’t do the analysis. You couldn’t say, ‘Give me all the ones with all California in them.’ No one knew what was in them.”

Creating a product with so much complexity that teams of MBAs are necessary to decipher its contents surely is a recipe for confusion. And on the ugly side of things, perhaps that was the intention. Regardless, in an age of social media where a company’s reputation can be destroyed in five minutes or less, this avenue will not ensure long term success.

However, a key question is whether customers really want to peer inside the black box. After all, investment banks had very little difficulty offloading these impenetrable structured products. Plenty of hedge, pension and even sovereign wealth funds lined up to buy these complicated products—and most with no questions asked.

In the analytics market, there’s an adage that business users really don’t care how a particular solution works, just so long as it meets their needs. And while this may be true in some instances, there’s also ample opportunity to enlighten consumers (or in this case application users) as to the “value” received through peeling back the curtain on how a product or service is designed and delivered.

What say you? Do your customers really want transparency? Do they really need to know what’s in the black box?

TAGGED: black box, processes, transparency
paulbarsch June 1, 2011
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