Data – it’s what companies are looking at more intently than ever before. The IDC recently reported that, “almost 3 zettabytes of data existed in the world in 2012, and this number will double every year through 2015.” Now that the amount of data has exploded, analyzing big data has become an integral component for businesses to stay competitive. According to McKinsey, “the increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in data for the foreseeable future.” Why are companies focusing so much on data? Big data helps businesses learn about their target market, analyze their products and services, helps in risk analysis, reduces costs, and offers insight into new business opportunities.
Big data is helping companies gain insight into their target markets. The car rental giant, Avis Budget, launched a new marketing sciences organization by using big data in order to offer more value to its customers. The company wanted to differentiate itself from the competition and were quoted as saying, “technology is used to forecast regional demand for fleet placement and pricing. Data is analyzed to better understand customers’ needs, preferences and intent to rent. From the service side, technology helps us offer a more cohesive customer experience across each of our customer channels”. The results of using big data analytics were clear. By deconstructing the customer lifetime value model, the company was able to get a prediction of rental frequency at the customer level. Their contact strategy has grown more effective with many cases reaching 30% over control. In addition, the data collected revealed some interesting insights such as the fact that many renters in the top two deciles never engaged in any kind of campaign. Avis Budget saw the power of big data when the company realized that it could get all this valuable information and then put it into the hands of employees that could act on this data.
Analyze Products and Services
Businesses can use big data analytics to analyze current products and services. For example, Ford Motor Company redesigned its 2015 F-150 truck after looking at big data and climate change models. The company made the truck 700 lbs lighter and added a 2.7-liter EcoBoost V6 engine option with start-stop technology to help reduce fuel usage. Another company that began rethinking its products’ sustainability by using big data is Nike. Nike used data analysis, future casting, and scenario planning to find ways to decouple growth from constrained resources. The company designed products to reduce manufacturing waste and also developed a water-free dyeing technique.
Big data is also beneficial in helping with risk analysis. Using data will help companies analyze the health of its suppliers and customers so that businesses can be ready to take action if one is at a risk of defaulting.
One major benefit of using big data is to reduce costs. In a report published by Health Affairs, several leading health institutions and universities offered various scenarios where big data could help reduce costs and improve healthcare. Using predictive analytics, healthcare companies can better manage high-cost patients. This information can help by identifying low-risk patients as well and allocating resources accordingly. According to the report, “nearly one-third of readmissions can be prevented.” Wearables can come in handy to track information and communicate important information to doctors and nurses. The clinical workflow can also be reworked by integrating a triage algorithm so that it can produce real-time risk estimates, allowing for healthcare providers to anticipate needs.
New Business Opportunities
Big data can help companies identify new business opportunities that they may not have seen without the information. Accenture along with GE conducted a global study on the Industrial Internet and found that there is a growing urgency for organizations to embrace big data analytics to advance their strategies. According to Accenture, “nearly half (49 percent) of the companies represented in the study said they plan to create new business opportunities that could generate additional revenue streams with their big data strategy while 60 percent expect to increase their profitability by using the information to improve their resource management.” The Industrial Internet has the potential to “drive trillions of dollars in new services and overall growth”.
To make big data even better, adding in context with the data already collected will make an impact. Beyond just capturing data, putting the data into context will make a big difference for companies. There is a shift toward real-time data so that companies can predict and act, but it will be a challenge. The companies that can figure out how to integrate context with big data and act on these insights will come out on top.