As organizations investigate the challenges of big data, a question haunts many executives: “Are you ready?” Many companies are aware of the power of big data, but are not yet fully exploiting the data they collect. While almost all organizations point to corporate information as a business-critical resource, there is still some confusion on how to turn this data into a useful asset. “A business running without accurate data is running blind,” says Ash Mahmud, head of CRM at Groupon, a position echoed by the respondents of a survey by the Economist Intelligence Unit. Here is an excerpt of the report that explores the findings of this survey.
PUTTING STRATEGY FIRST
Even seasoned data professionals can find the world of big data overwhelming. A company might be collecting market research interviews, a stream of information from social networks, supply chain data and sales figures from multiple sites. Which source is the most important? And how can they be combined to maximum effect?
For executives pondering these issues, a word of caution: they may be the wrong questions to be asking. Edd Dumbill chairs the O’Reilly Strata Conference, a leading big data event. He says that many executives believe that the right technology can produce “magical results”. But companies should start by prioritizing the challenges they want to tackle, and then build an appropriate data strategy around those objectives. “You need to know what problem you want to solve,” says Mr Dumbill.
The range of challenges that can be tackled with big data is incredibly varied. Music companies are using data to fine-tune their marketing campaigns; casinos leverage data to poach customers from their rivals. But whatever the target, companies should start by agreeing on a focus and, with that focus in place, prioritize, manage and process data accordingly.
Companies lacking a focused data strategy are likely to suffer. When the Economist Intelligence Unit asked companies about their approach to data management, less than one in five said that they had “a well-defined data management strategy that focuses resources on collecting and analyzing the most valuable data”. Yet the response varied markedly by financial performance. Almost one-half of high-performing companies described their strategy as “well defined” compared with an average of less than 15% in under-performing companies.
For the strategy to be effective, it usually needs to come from the very top of the organization. In 1998, Harrah’s Entertainment, a casino company, recruited Gary Loveman, then an associate professor at Harvard Business School. Mr Loveman was asked to put data at the heart of the organization, a decision that amounted to a big cultural shift for the company. “Fortunately, when I started this I was chief operating officer,” says Mr Loveman. “I was able to almost oblige people to go along. It is not something that you can lead from a position of limited influence.” Having that influence paid off: Mr Loveman is now chief executive officer of the company, since renamed Caesars Entertainment and currently the third largest casino organization in the world. He credits his strategy with helping the organization to expand to 14 different US states.
Top-down pressure is often required in part because data issues tend to cut across traditional departmental boundaries. “It is very, very common to find data in disparate silos inside organizations, with a strong degree of territorial or technical boundaries around the data,” says Mr Dumbill. To implement an effective strategy, staff may need to cede territory, which often requires pressure from the C-suite.
There is no one-size-fits-all solution, but data experts say that company priorities, not the technology itself, should dictate the course of action. The importance of strategy can be seen in the survey results. Twenty-nine percent of companies that described their performance as “significantly ahead of peers” said that they had a well-defined strategy for using the cloud; the figure for companies that lag behind their peers is 11%.The gulf is even greater for smart system strategies: over one-third of high-performing companies have a well-defined strategy in this area compared with around 5% of under-performing companies.