As I write, scientists are continuing to monitor and analyse data in order to predict the outcome of an eruption at the Bardarbunga volcano in Iceland. It is yet to be revealed whether we will get another ash cloud disrupting European travel as in 2010, but if it is on its way, big data will give us forewarning.
The big data revolution has taken shape. There are now few aspects of business which cannot benefit from the revolutionary trend, and there are few more convincing arguments to leaders, than the opportunity to save costs and drive up profits. Simply through a better knowledge of customers and a greater understanding of business units, any company can significantly lower unnecessary outlay and maximise productivity and efficiency.
> See also: Big data: not a magic pill, but an antidote
Startup guru Eric Reis has written on the importance of running a ‘lean startup’, something which is arguably easier when you are a small business. However, there are some very simple means by which larger organisations can reduce costs through data:
A better knowledge of customers
To any organisation, understanding customers is essential, however, understanding your customers must go beyond simply knowing the sort of products they like. This needs to be extended to critical facts such as where they live. Knowing that one individual lives with other customers is highly relevant as it is pointless to send out three catalogues to three people who have the same home address, for example. One will suffice, and will also save money.
Equally, an awareness of customer shopping habits or spending will also reduce costs. Some people for example do not tend to buy discounted or reduced items, and others only buy at a discount. It is therefore more efficient in the retail space to market new products to some customers, and advertise that you have a sale on to others. Getting hold of this sort of data, is a relatively simple process for data processing systems and simply allows for focused marketing. There is little point marketing to customers who are not interested. It can be expensive, and will not result in any more or less sales.
> See also: The NHS is sick- big data could be the cure
One example of a company who saved money by embracing big data is PCM, a large direct marketer of technology products. They found that the money they were spending to acquire customers was actually being used to re-acquire the same customers over and over again.
This is not an efficient use of funds, and a trap that increasing numbers of businesses are falling into. Re-marketing to existing customers is important, but this group do not need convincing that your service is the one for them. This prompted PCM to invest in big data analytics technology that makes it possible to recognise existing customers and to efficiently re-market to this group without having to pay for expensive acquisition campaigns like AdWords.
Better knowledge of business units
For many organisations implementing big data projects, the focus has been external, with marketing one of the clearest ways by which companies can benefit from the insight provided. Although this has been the focus, as any CEO will tell you, it is important to gain control of internal costs. A better knowledge of business units and the way they interact and function can allow organisations to maximise productivity, cut waste and therefore save money.
The growth in dependence on IT has provided greater opportunities to monitor the movement of data through an organisation. Data can now hold teams and people accountable. Examining the distribution of data within a company and the results of different business units, leaders can get an overall view of the organisation’s direction, identify problematic and over performing units and make changes to maximise productivity and efficiency.
> See also: Big data is the future of industry, says GE
According to a McKinsey report on the Social Economy, investment and acting on social business data can result in a 20-25% increase in knowledge worker productivity in consumer and professional service sectors.
This increase in productivity will result in more creativity, and less time and resources going to waste, ensuring costs are kept to a minimum and organisations get the best out of their staff.
No matter what market a business operates, maintaining agility and keeping costs to a minimum will pay significant dividends. Especially in larger organisations where individual marketing efforts and productivity are more difficult to identify, data can make a real difference in saving money. Saving money is one of the lesser known benefits of big data, and yet another critical reason for businesses to examine the opportunities available within this evolving technology.