Big Data:
How to use the data that your business gathers
to improve your business.
Big Data is
one of the new buzz words that is been used at the moment. It refers in my
opinion to the data that your company can gather from it operations. The concept is that you can use this data to
improve the efficiency of your business. It can be used for a multitude of
purposes depending on what information your gather and depending on how you
decide to try and use it. This data can be gathered from your customers or from
your suppliers .It can be gathered from your contacts with out side agencies.
It can come from your interactions with social media sites on the internet or you
could do market research or set in place a database which is updated as you
make contact with third parties.
The three
attributes of data gathering have been defined as the three v’s of volume,
velocity and variety. In the modern world, technology has enabled more and more
data to be gathered and analysed (this refers to the volume of data).This is
been accumulated at much greater speed (velocity) and it can come from a much
wider variety of sources. In this regard the world is truly becoming a global
market which is smaller and faster and varied.
A lot of
the bigger global corporations have realised the value of utilising the data it
can gather to its full potential in order to maximise the returns it can
achieve. Some have even started to place a value on data in their accounts. It
is these firms that realise that data can make such a huge difference to their
profitability and return to stakeholders. The problem often is that people do
not know how to approach the information they have available to them in order
to use it in a productive manner.
In my
opinion the solution to this problem is to ask yourself what question does the
information you have available answer. By so doing you can brainstorm in order
to make full use of it. Often times the benefit of analysing data is lost
because the volume or complexity is too much for people to comprehend. This is
where taking small bits of it and working up to a full matrix of what you have
available may make it more accessible.
A really
good example of using big data to expand and focus a business is Tesco’s
clubcard. When the clubcard was introduced the information it provided allowed
Tesco to grow from the third biggest retailer in the UK to the third biggest
retailer in the world. They were able to see for example which products were
most popular in which stores and aim their purchasing to maximise sales. They
also would have been able to see what quality of different products were the
best sellers and in which stores. So that stores with customers who bought
cheaper brand products could be stocked to reflect this pattern
Your
business can do the same. You have a host of information available to you that
you could use. You could take a look at what services or products that
customers are looking for the most and market your product towards that, By
asking customer questions about where they heard about the firm, you could
decide which advertising methods were most productive for certain groups of
customers and be more specific in what products and services you were
advertising in any geographical area and through which media channel.
I also
think this can extend to other areas of the business from the purchase of raw materials
and stock through to production methods, By analysing what customers
requirements are in terms of the quality of product sold or the type of extras
that they purchase, you could reduce your capital investment in stock by
concentrating your purchases on the products that are the most in demand. This
is especially relevant in a economy where the banks are not forthcoming with
finance for business investment. It may even facilitate you implementing a just
in time system of stock control which has the benefit of dramatically reducing
your need for working capital investment in stocks. The implementation of a
total quality management system by using the data available to you from your suppliers
and your customers may allow you to implement a just in time system which will
be both functional and reliable.
Relevant data
can also come from in house sources. If you are a manufacturer you could monitor
and gather information about the production process from the raw material input
to the effectiveness of machinery, to the quality of the finished product. This
data could then be used to decide on an optimum mix of quality and production
techniques which produce a finished product which meets customer requirements
and which maximise your profitability
The growth
in the use of the internet and social media has allowed for analytical models
to be developed which can really help you to target your products and services
to demographic and geographical markets in a way which can maximise your sales
and return on investment and profitability. One of the concepts in managerial
economics that always fascinated me, was price discrimination and I feel that
true price discrimination can be achieved by using the data available to a
business in order to maximise the sales price achieved in particular markets. This
is particularly relevant to globalised companies such as motor car manufacturers’
who can charge different prices for different spec car models in different
geographical areas. The standard features in the Honda civic you buy in Ireland
are a lot different to the standard spec of a Honda civic bought in the United
Kingdom.
So my
advice is to step back from your day to day activities and take an overall view
of your business by looking at the information that is available at your finger
tips. You just have to discover where this information is and then decide how
to use it.
Author
Frank McGivney BA (1st Class honours) ACMA CGMA 14 March 2013
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