Big Business from Big Data
“Dad, how many mobile phones were sold last year in the whole world?”
“Is this a trick question? Well, there are about 7 billion human beings on earth. Assuming every…”
“No, no—give me a number.”
“Well, I am not 100 percent sure. How many do you think were sold?”
“How do you know?”
“Dad—it’s on the Internet!”
My 10-year-old daughter left the room, triumphantly. I looked after her—admittedly feeling a little bit jealous. I wanted to be 10 years old again, too. I’d like to grow up with access to any information, available at any time, at the touch of a button. And this is only the beginning. Soon, tailored information will be provided to us proactively, before we even know what to ask for.
It’s easy to forget how incredibly rapid technological development has been. The true uptake of the Internet happened only about 15 years ago. Think about what would happen if your family had to spend an entire week without being connected to the Internet and the constant global interactions to which we have grown accustomed. The next ”big thing” is always around the corner, waiting to disrupt everything we take for granted today.
So what will be the next big thing in technology? This is a topic of endless debate on the Internet, at dinners with friends, and in the trade press, with the discussion often descending deep into the weeds of architectures, capabilities, protocols, and standards. However, for a business executive, the only thing that really matters is the business impact. The only relevant business question is ultimately, “How can I improve my business performance enabled by technology?”
In this space over the next several months, I’m going to open the “black box” of technology trends to shine a light on what they mean for business leaders. In my mind, the real significance of technology for business comes down to two questions:
- Does it provide a superior customer experience? When technology is used to improve customer experience, businesses benefit from greater customer loyalty and increased revenues.
- Does it enable superior operational efficiency? By using technology to streamline business processes and increase productivity, businesses reduce costs and improve the bottom line.
Leveraging analytics and Big Data will transform the way companies interact with their customers and how they use their assets. Picture yourself:
- As a consumer—Would you like to receive truly relevant and personally tailored offers, proactively delivered to you at the moment when you are considering how to fulfill a burning need?
- As a company—Would you like to be able to use real-time information and analytics to anticipate the needs of your current and potential customers, and use that knowledge to make them offers they cannot refuse? And, would you like to be able to cut inefficiency and waste by knowing exactly how much of your product to produce and stock to optimize inventory while always serving the needs of your customers?
Though it is still the early days of Big Data, the market is moving fast and analytics will soon be an integral part of how you run your business. Early adopters will be ahead of their peers as they move up the learning curve, and slow movers will run the risk of being hopelessly left behind. We are currently working with a number of customers in different industries to turn fiction into reality and help them generate tangible business benefits.
Here’s just one example from the retail industry: How many times have you waited in a long line at a retail store and wondered why they don’t have more registers open? On the other hand, if you’re a store manager, you don’t want your staff standing around when there seem to be more checkers than shoppers. How can you better balance the business need for high employee productivity with the customer need for a quick checkout experience?
Smart application of Big Data and analytics can help merchants optimize both employee productivity and customer experience. A fusion of sensors—from store parking lot cameras to Wi-Fi-enabled shopping carts and customers’ mobile phones—can be analyzed in real time to predict the flow of customers to checkout lines. The system can trigger just-in-time staffing to handle peak checkout traffic, and then allow sales associates to do other jobs during traffic lulls. Labor productivity is a major factor impacting retail profitability. For a large retailer, just a couple of percentage points of productivity in checkout labor would save tens of millions of dollars in SG&A costs. If this capability is extended to other areas of the store, productivity increases can easily reach into the hundreds of millions of dollars.
Sensor fusion and Big Data analytics can also increase revenue by helping retailers interact with their customers in real time. Many customers have experienced the long register tape of coupons they receive at the end of the day’s shopping trip. Increasing accuracy in location-based services allows a retailer to extend this type of promotion to impact today’s market basket—by offering personalized in-aisle promotions based on past purchases and the customer’s location in the store.
There are also solutions that send an alert to restock items when shelf sensors or video analytics indicate that inventory is getting low. This not only saves staff time, it also assures on-shelf availability, preventing lost revenue from customers not finding what they want on the shelves.
Using a combination of in-store sensors, location-based services, video technology, and advanced analytics, retailers can solve their top business issues for a physical retail store—significantly decreasing checkout times, improving associate productivity, increasing conversion, and ensuring on-shelf availability. These are the new competitive benchmarks of business performance, and our research and customer engagements show billions of dollars in value for the early adopters. While the economic opportunities for retailers are significant, it is essential to implement these solutions in ways that add true value to consumers and are not viewed as invading their privacy.
Of course, retail is not the only industry where Big Data and analytics are making a big impact. In upcoming blogs, I’ll take a closer look at some of the other industries that are frontrunners in harnessing the value of analytics:
- Financial services—e.g. stock analysis, credit score/ risk assessments, fraud detection
- Healthcare—e.g. remote health monitoring, biometric sensors, electronic medical records
- Energy/utilities—e.g. managing smart grids, resource demand/dynamic pricing, water and power leak detection
Meanwhile, I encourage business leaders to watch for opportunities to transform their business performance enabled by the latest developments in analytics and other enabling technology.Tags: