The big data gold rush is gaining momentum and it’s up to CIOs not just to keep that data safe, but to have the right tools and talent to locate and exploit a rich seam of data and make it accessible to the business.
Many firms have already staked their claim. Finance houses use complex algorithmic trading to analyse vast amounts of market data to create value in a way that was unthinkable a decade ago. Retailers analyze buying trends in close to real-tie, updating stock levels and pricing to squeeze maximum revenue. US department store chain Macy’s, for example, can use demand and inventory information to adjust pricing for an amazing 73 million items in just one hour rather than the 27 hours it used to take before using big data analytics.
Big data is transforming business, so CIOs need to shift their focus to put data centre stage.
In a recent CIO article, Kim Nash, argued that CIOs had better be ready with an answer when their CEO asks them to put a figure on the worth, or potential worth, of the company’s data. For while the chief supply officer knows the worth of the factories and the CFO knows to the penny the organization’s debt, many CIOs would struggle to put a price tag on the ‘I’ of their job title.
But if they don’t find an answer for this question, then somebody else may come up with it instead. Step forward the chief data officer, CDO, still a relative newcomer to the management team, whose job is to do just that: view data as a strategic business asset and a revenue driver and represent that at executive level.
According to industry analyst Gartner, 17% of organizations will have appointed a CDO by the end of this year as they seek to cope with the unstoppable deluge of big data. In many organizations, however, it will fall on the shoulders of CIOs to manage data alongside their bulging ‘to do’ list. Yet among the long and impressive list of CIO technical and business attributes, data management expertise is probably not a key skill.
Just as well then that CIOs quick learners, because the stakes are high. CompTIA's Big Data Insights and Opportunities 2013 report outlines the top five costs of managing data inefficiently:
While using data effectively can be transformative, equally, failing to manage it can damage the business. No CIO wants responsibility for that list of failures.
There are four things you need to do at the start of this business transformation, according to an AT Kearney article, Big Data and the Creative Destruction of Today's Business Models:
Business transformation doesn’t have to happen wholesale: Start small.
All too often big data initiatives stumble because the business case is not sufficiently well defined: a goal of increasing productivity or customer insight needs to be drilled down much further. So, work out exactly what level of productivity and in which part of the business you require and which particular niche of business requires customer insight.
It’s also too easy to get so bogged down in the nitty-gritty of data collection and analysis and lose sight of the real end-game: finding a new way of looking at the data that your competitors don’t have; leading to new products and revenue.
The power of big data analytics is that it enables experimentation. Customer behavior changes the whole time, and so will your behavior and the questions you ask. Instead of analysis being a closed, end point, it’s a process – your competitive edge comes from constantly monitoring and responding to what’s happening.
For some businesses this is going to mean a massive cultural shift in the way they work. If your company or department is addicted to meetings before any action is taken, then the immediacy that big data analytics can bring is going to come as a bit of a shock.
There may be gold in those big data mountains, but you have to know what to do with it.