By Timo Elliott
There’s been a transformation in analytics technology. Companies must look beyond the obvious benefits and use it to transform the way they do business.
Analytics technology is changing fast, but we’re only starting to scratch the surface of the new business opportunities.
New “big data” technologies include in-memory computing, NoSQL / Hadoop, in-database calculations, column stores, and massively parallel architectures, and. The combination of these technologies provides an opportunity to access massive amounts of a greater variety of data, faster, and more flexibly.
Data is easier to access and manipulate than ever, thanks to improvements in self-service data discovery, mobile interfaces, and predictive analytics. We can now provide more intuitive data access to more people, in more places.
Clearly, organizations can improve the way they do analytics with this new technology – but the real opportunity is using it to rethink the way they do business.
Today’s management structures were created to cope with information scarcity. Executives can typically only see a high-level view of what happened in the past, and so have to rely on hierarchical levels of management and complex budgeting and incentive systems to guide company behavior.
As management thinker Gary Hamel puts it in his book “The Future of Management”:
“Right now your company has 21st century, internet-enabled business processes, mid-20th century management processes, all built atop 19th century management principles”
“High-Resolution Management” is a term coined by university researchers to describe how new analytic technologies will drastically change how organizations makes decisions.
With access to fine-grained information about what’s currently happening, organizations can react to events, plan, and reprioritize in real time, and hence simplify much of today’s cumbersome and unwieldy management infrastructures.
The new opportunities for analytics, and high-resolution management, can be summarized at three different levels:
- Remove bottlenecks
- Rethink business
- Flip business models
The first level of opportunity for the new analytic technologies is to fix bottlenecks that have prevented organizations from effectively using information to manage their business. These are typically the types of opportunities that organizations first think of.
Prompt, detailed management information. Data volumes and complexity have prevented many organizations from making the best use of the information they already have. For example, large retailers have long stored all the data required for detailed profitability analysis, but the quantity of data meant that they were unable to run full analytics in a reasonable time frame. Product managers have been forced to make approximate decisions based on high-level aggregated figures.
Today, companies like Colgate-Palmolive can use in-memory technology to run analytics on specific brands and locations, at the lowest level of detail, at a local level, in real time. This in turn transforms the ability of managers on the ground to make the right decisions, fast enough to make a difference.
Faster access to new information. Companies like Red Bull have been able to speed up and simplify their data warehousing environments using in-memory technology. The company was able to eliminate multiple levels of data staging that was delaying getting actionable information into the hands of business users. They can now load detailed data twenty-five times faster, and flexibly create new views of the data without having to reload it.
A more complete view. Providing business users with a complete view of what’s going on requires a variety of data, not just the structured data stored in databases. The new analytic technologies make it easy to incorporate text and social information into mainstream corporate analytics. Companies like medical device manufacturer Medtronic can now more easily access the large amount of unstructured user feedback they receive about their products, combine it with other data sources, and provide it to business people through dynamic interfaces.
Information where and when it’s needed. The days of business people and executives being in the office have long gone. They work on the road or from home. Companies like Allied Electronics Corporation in South Africa have adopted a “mobile first” strategy, finding that it was less cumbersome and cheaper to provide executives with information via portable tablets than alternate solutions. The executives can review and discuss key financial figures on-site at subsidiary headquarters.
The next level of opportunity is to reach beyond providing better information, and use analytics to transform an existing business process.
Proactive Action. Instead of using analytics only to assess previous performance, companies are using the new capabilities to get data fast enough to make a real difference. For example, online grocer Fresh Direct uses analytics to understand what problems will happen in the next few hours, so they can actually fix them before a customer is impacted.
FreshDirect has an operations center that manages its fleet of delivery trucks. In a large metropolitan area like New York, traffic doesn’t always flow predictably. A traditional approach to BI would be to print a report showing the level of on-time deliveries the day before and then ask the transportation department what went wrong for the orders that were delivered late.
FreshDirect uses analytics in a more impactful way. The company monitors the delivery rate of every truck and enters that data into the BI system on an ongoing basis. Every hour, it uses the previous hour’s data to predict how many deliveries will be on-time in the next hour. If the predicted delivery rate is below FreshDirect’s target, the company sends out an auxiliary truck or trucks to help make deliveries. The company holds 10 trucks in reserve for just this purpose.
FreshDirect is just one example of “business in the moment” – organizations using the new analytic capabilities to provide information much earlier in a business process, enabling a proactive approach, rather than just the reactive analysis of past history.
New Customer Services. The UK roll-out of smart meters to monitor energy usage ushers in the prospect of offering innovative services to customers based on the possibilities enabled by half-hourly readings from millions of smart meters up and down the land. Providers like Centrica are planning to use the new analytics capabilities to give them deep insight into consumption patterns. This can be used to give consumers incentives to change how and when they use electricity, to make optimal use of infrastructure resources.
International grocery chain Casino is rolling out a new mobile shopping application for its customers. The application uses real-time data from the stores’ retail applications and combines it with customer profile information to enhance the shopping experience. Consumers can create online shopping lists, give feedback on products, scan items in the store for more information, and receive customized promotions.
Flip Business Models
The ultimate opportunity for businesses is to use analytics to fundamentally transform an industry. Instead of using analytics to improve an individual business process, it is used to create new business models.
For example, T-Mobile now creates new “products” on the fly, using analytics. Instead of laboriously creating a range of rate plans, promoting them, and analyzing the results, the company now uses in-memory analytics to automatically create hundreds of discrete, highly personalised tariffs based on usage profiles. Over time, the successful plans are retained and improved, the unsuccessful plans are dropped. A slow, calendar-driven product cycle is replaced by a constantly-iterating, analytics-driven system.
2012 is the year to rethink your analytic technology to take account of the new analytic technologies, to take the first steps to high-resolution management and rethink the way you do business:
- Remove today’s bottlenecks that prevent management from getting the data they need, caused by data volumes, data variety, or data access.
- Rethink business processes by embedding real-time decisions.
- Create new products and services that could only exist because of today’s analytic power.
Organizations are using this technology to change the way they do business. If you run an analytics project, you are in the forefront of these changes – it’s your job to help explain to the rest of the business how these technologies should be changing their existing processes. Good luck!