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Big data makes everything more complex

Dr. Ralf Schneider, CIO of Allianz Group

In my last blog post, I explained how industry leaders at The Premier Business Leadership Series in Amsterdam spoke about the importance of focusing big data strategies on the customer – involving moving from a product-centric to a customer-centric approach.

This model inevitably leads to new challenges for an organisation’s infrastructure: there’s more data, more people needing insights from the data, more processes that need to be tuned and optimised. In short, more everything and that can become very complex.

To quote Dr. Ralf Schneider (CIO of Allianz Group and Board Member of Allianz Managed Operations and Services SE) in his presentation, “complexity isn’t scalable, but the management of complexity is.” Allianz is solving the problem of big data by globally standardising on core infrastructure and software platforms. These offer predictable methods of accessing and analysing data in a way that has the flexibility to respond to local needs whilst delivering efficiencies of cost and stability.

These new capabilities also provided new business opportunities such as automated customer-facing processes, real-time decision-making, new kinds of tailored offers, etc., as well as the ability to assess a customer’s behaviour and needs far more frequently than before. Allianz discovered another benefit of analysing the data coming from their automated processes – you also learn a lot from the people who end up not being customers, insights that can be used to fine tune future offers.

In a discussion involving a number of business leaders, Executive Vice President of SAS Europe, Middle East, Africa and Asia Pacific Mikael Hagstrom pointed out that, with recent advances in computing and high-performance analytics, cost of entry is no longer a barrier to business analytics excellence. Indeed, delay and late entry into the field can ultimately end up costing far more. Nor are the results constrained to purely revenue and profits for commercial organisations; he cited numerous examples of tangible benefits from the public and non-profit sectors as well. What’s necessary is the wherewithal to maximise the returns inherent in one of an organization’s most strategic asset, big data.

Erik Brynjolfsson, Director of the MIT Center for Digital Business

All of this together can add up to big results; in his presentation ‘Strength in Numbers: How Data-Driven Decision-Making Drives Innovation and Productivity,’ Professor Erik Brynjolfsson (Director at the MIT Center for Digital Business) explained how his extensive research shows that businesses that invest in analytics (‘data-driven decision-making’ in his terminology) demonstrably outperform those businesses that do not (for example, by between 4% and 6% in productivity and profitability).

Achieving these results depends on more than the technology alone; it needs a shift in the organisation’s culture. Not only does the organisation need to become more reliant on data and analytics to support decision-making, in the context of ‘being where the customer is’ it requires an understanding that this insight is as much about helping the customer ‘win’ as the organisation.

To do this, Erik sees that successor to big data will be ‘nano-data’; exploitable data about individual customers and connections that is contained within the massive repositories of data gathered by modern organisations. With this we have come full-circle – nano-data is all about being where the customer is. You can gather terabytes of data, analyse it for insights and optimise offers and processes as a result but what really counts is the customer’s experience at the individual transaction level.

To paraphrase Saul van Beurden (CIO Retail Banking & International, ING), ‘customer expectations are high and they expect you to reflect their needs and preferences, not the other way around.’ If you are to remain relevant in today’s hyper-competitive world you have no choice but to be where the customer is because if you are not, there are lots of competitors who are happy to be there instead.

As another speaker said “The pace of change is now so great, you can’t afford to ‘wait and see.’”

So what have I taken from all of this?

  1. That if I am to be where my customer is, I need to systematically collate much more data about who my customers are and what kind of experience they expect.
  2. I need analytics to convert raw data into valuable insights that I can act upon.
  3. That insights need to inform a customer-centric strategy (not just an introspective, process/product-centric one).
  4. Big data can feed the engine of business processes to enhance commercial performance.
  5. Ultimately, that the transformation is a journey, not a destination, and that requires that I play my part in evolving the corporate culture along the way.

To read more about the conclusions from the Premier Business Leadership Series in Amsterdam, read the conclusions paper ‘What the Executives Say.’

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One Comment

  1. Posted August 16, 2012 at 1:29 am | Permalink

    Great Article. It’s true that Company now a days facing huge problem while managing their business data internally and giving them a solution with these techniques can help them a lot..

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