Big Data for Small Companies

Business Intelligence
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As a small company, how do we get value out of big data?

Big data. The tech world news surrounding big data is dominated by what the larger players are doing. They of course are flagship examples for big savings and big revenue.

A great example of a company using big data would be Kroger. The average return rate for coupons is 3.7 percent, according to the Direct Marketing Association. Kroger does 71 percent. They target each customer individually and market to them as such as part of a quarterly coupon mailer:

“Those quarterly mailers contain 12 coupons specific to an individual household and are carefully designed. The upper left may offer a slightly esoteric product like a special cheese, while Tide may be lower on the flyer and the last two coupons might be experiments, such as adjacent products -- a purchaser of baby food who doesn't buy diapers might see an offer for diapers, for example.”

Historically, coupons have relied heavily on demographics rather than understanding a customer base. This change in how they target customers resulted in about $10 billion in revenue.

And it’s not just customers. Big data is becoming a crucial component in human resources. For instance, Xerox was able to cut its call center attrition rate by 20 percent by analyzing big data to not only understand why people leave, but to ensure the right type of call center employee is hired in the first place.

That’s big data for big business.

But it can be very valuable to small businesses too.

With 28 million small businesses, they’re the backbone of the U.S. Fifty percent of all people work for small businesses. If you ask me, I would suggest that small businesses have more of an advantage in that they can use the big data value that much larger companies have already forged in advance.

Take the recent partnership between IBM and The Weather Company of which there’s over 100,000 weather sensors bringing together 2.2 billion unique forecast points and 10 billion forecasts on an active weather day. That’s a lot of information. And it’s worth something to people who depend on the weather.

I work for an ice cream company. It’s a small to medium-size business (SMB). And like many SMBs, we work with much larger customers and vendors. We want good weather so our customers buy more ice cream. That’s the simple truth. But more importantly, we want to know when and where there’s going to be good weather so as to make smarter decisions with our supply chain, labor force scheduling, manufacturing, transportation, and marketing. We have a good idea, based on long-term historical data and modern forecasting, what our customers all over the world should anticipate for weather. This allows us to maximize our efficiencies.

With the surge in cloud services and even Big Data as a Service (BDaaS), this type of information is easier to get than ever for the smaller companies that don’t have the horsepower or technical acumen to crunch the numbers themselves.

Eleven Lessons (or Four)

Very recently I re-watched the 2003 documentary The Fog of War: Eleven Lessons from the Life of Robert S. McNamara. It’s a fascinating film, no matter your political persuasion. Many of the lessons within have to do with three major components of McNamara’s life: when he worked in the U.S. Army’s Department of Statistical Control during World War II, his time as president of the Ford Motor Company, and then most famously (or infamously) as the Secretary of Defense under both Kennedy and Johnson.

In this film, the lessons are as follows:

  • Empathize with your enemy.
  • Rationality will not save us.
  • There's something beyond one's self.
  • Maximize efficiency.
  • Proportionality should be a guideline in war.
  • Get the data.
  • Belief and seeing are both often wrong.
  • Be prepared to re-examine your reasoning.
  • In order to do good, you may have to engage in evil.
  • Never say never.
  • You can't change human nature.

The lessons that struck me most in terms of business are the following:

  • Maximize efficiency.
  • Get the data.
  • Belief and seeing are both often wrong.
  • Be prepared to re-examine your reasoning.

In the world of business, these lessons learned are still valid though they were experienced 50-80 years ago. In Information Technology terms, they’re ancient history akin to Sun Tzu’s The Art of War. I would think that these four lessons could be applied today for any business.

Maximize Efficiency

We need to have the right amount of people doing the right jobs with the right tools and the best information possible. Only then can your business be making the best decisions.

Get the Data

While data analytics has been around for a very long time, many companies may still be using rudimentary tools and services to get the same information they’ve always received and achieving the same overall results. The key for smaller companies is to take advantage of big data and/or modernize the data they’re collecting and analyzing.

Belief and Seeing Are Both Often Wrong

This is a tough one to grasp. Without all the information and an honest, objective, and ideally independent assessment, your view of any situation may be skewed to support what you want to happen, not what has happened.

Be Prepared to Re-Examine Your Reasoning

This is another tough one and is entirely related to the former point. One of the hardest things a person can do is to not only admit they’re wrong, but to admit to themselves that their reasoning is suspect.

Embracing Big Data

My point here is that big data can be an incredibly daunting hill to climb, especially to smaller customers. The key is to simplify the process by starting small and solving one problem at a time. The one thing that a small business has over a large business is agility. A small business can act on insights derived from big data much faster and with less red tape than a big enterprise.

With Big Data as a Service, you have access to the same information that large enterprises have. It’s what you do with it that matters.