With all the noise and chatter about “Big Data” it’s easy to forget that most companies need to first get their arms around small data.
I had lunch today with a friend, who is a partner in a large strategy consulting firm. He described a trend among clients jumping on to the “Big Data” bandwagon. Someone in the boardroom says “we need to get Palantir.” Someone else follows with “we need more data feeds.”
My friend summed up his reaction perfectly: “Are you really sure you want to add more water to the firehose?”
Most companies fail to effectively use the data they already have. They assume that somehow plugging a new bit of technology into the enterprise will jump them into the front ranks of analytics competitors. Unfortunately this approach usually leads to a disappointing mess. In fact, the work involves much more than just purchasing a piece of software. As Thomas Davenport discusses in his article Competing on Analytics, the process of becoming an analytics competitor takes years. Successful companies deploy analytics as part of a coordinated, overarching strategy championed by top leadership and deployed at all levels.
That shouldn’t discourage companies from starting though. Proficiency takes time. “Big data” is heard so much these days it’s lost meaning, and the expanding volume of buzzwords that surround the topic make many mid-market companies throw up their hands.
What we tell our clients is to ignore the hype. You don’t need Hadoop/NoSQL/Palantir/Flume/etc to get started. What you need is the commitment to start. Understand the data you have. Build an analytical culture. Pick a core process to begin with. Expand from there. Becoming an analytics competitor is a process, not an event.
The potential payoff is enormous. IBM research indicates that companies that compete on analytics outperform peers by nearly 2 times on revenues and EBITDA.
And the risk of failing to adapt are stark. In the ’90s many companies assumed the internet was a fad. But how many successful, growing companies now do so without relying on the internet and information technology to some degree?
Davenport lays out the key requirements on the path to becoming an analytics competitor:
- Champion analytics from the top
- Create a single analytics initiative
- Focus your analytics effort
- Establish an analytics culture
- Hire the right people
- Use the right technology
Focusing on small data - the internal data that a company already has in its existing financial and operational systems - is cheap. It doesn’t require a six-figure or seven-figure investment. And the return on investment is high.
We’ve seen firsthand the power of unlocking corporate data with simple and scalable business intelligence (BI) solutions. It’s amazing to see vice presidents and managers suddenly engage and take an active interest when they have access to dashboards streaming real-time data. Once people get a taste, they want more.