Big Data: Bupkiss or Business Booster?

By Diane Merlino

What is big data? Is it a broad catchall phrase that means so many different things it ends up meaning nothing? Or is big data the foundation principle of a strategic approach to information collection and management that is set to transform business, and society itself, in the way it enabled its storied forerunners — Google, Yahoo!, Facebook and Amazon?

IBM Global Business Services surveyed 1,200 businesses in 95 countries both to define big data and determine how — and if — businesses are developing and implementing big data strategies to improve their businesses.

The result was a comprehensive study titled “Analytics: The real-world use of big data,” co-authored by Michael Schroeck, partner and vice president of IBM Global Business Services. The report illustrates the measureable impact big data analytics is already having on business, as well as how companies throughout the world understand what it’s all about. The report also covers the positive social implications inherent in the application of big data to realms as diverse as medicine, transportation, food production and law enforcement.

“I think we really do have an opportunity here, not only to benefit corporations but to continue to benefit the societySchroeck as a whole, and that’s where it gets really interesting,” Schroeck told Travel Weekly PLUS.

This is the second excerpt from a dialogue between Schroeck and Travel Weekly PLUS Editor in Chief Diane Merlino.

Merlino: A recent Inc. Magazine article identified big data analytics as one of the top 10 trends to ignore this year. It was in the No. 2 spot. The rationale was that real “big data” involves millions or even billions of data points and is intended for very complicated tasks, like predicting the weather. The article makes the case that complex analysis based on this massive volume of data is not what most businesses need. 
Mike Schroeck:
Trying to separate out the reality from the hype was the overall objective of the study. We talked to almost 1,200 firms around the world. All industries were represented, 95 countries. Respondents were 54% business, 46% technical, big companies and medium-sized companies. It was a very diverse study to find out what companies are actually doing, knowing full well that there is a lot of hype in the marketplace.

The study clearly shows that organizations are investing in big data and will continue to increase those investments. And we’re starting to see examples of companies and organizations across many industries delivering business value from their big-data investments. So, it’s real.

Merlino: What do you mean by “delivering business value from big data investments”?
Real, quantifiable business benefits — for example, the ability to better understand your customers and to understand who the most valuable customers are. Telcos, for instance, are rolling out marketing programs based on big data to see a reduction in churn, which is one of the things that they’re focused on.

In the supply-chain area we’re seeing benefits associated with reduction in inventory levels, reduction in stockouts, and improved customer service by having products more readily available when they’re needed. We’re seeing significant business value in areas like fraud detection, in health care, in government.

Right across different industries you’re seeing organizations starting to leverage big data and quantify the benefits

Merlino: What about the size of the company? Is implementation of a big data strategy mainly for bigger companies, or does it present opportunities for mid-sized and smaller, more entrepreneurial companies?
We didn’t focus on very small companies, but we found, interestingly enough, that the middle market has really picked up on this, particularly emerging companies that have their entire business model built around the Internet and going to market in new and different ways.

If you think back to the forerunners that kind of started big data, at the time they were pretty small companies called Google and Yahoo! and Amazon and Facebook. You can see what happened as a result of them really leveraging these big-data concepts.

Merlino: How are you defining middle market companies?
Schroeck: Companies with $1 billion and above in annual gross revenue. That was the base of the survey, who we targeted. We did not address the real small companies in the survey itself. There were some smaller companies below $1 billion represented in the survey, but not the real small startup companies.

Merlino: I want to ask you about smaller companies because, by the definitions you're using, many of the companies in the travel industry are smaller companies. Are the concepts and applications of big data applicable to smaller businesses?
Absolutely. In order to survive and serve their customer base, small and middle-market companies are going to have to leverage big data — data they have direct access to but, more importantly for those companies, /uploadedImages/TW_Plus/xTW_Plus_Images_ONLY/IBMbigdatacover.jpgdata that they can access through public channels or in partnerships.

The travel industry is an excellent example of where you're seeing airlines partner with credit card companies or with hotel chains or restaurants or tour operators to leverage and share a certain amount of information to better serve their customers, to go out with more personal offers and so on.

Merlino: In very general terms, where do the majority of businesses stand in terms of understanding the importance of big data?
Most organizations we talk to today believe that their information assets present the biggest opportunity for differentiation and competitive advantage within their industries, particularly from the business side of the house.

What we’re seeing at the topmost level is that now the executives get it. They’re demanding access to more and better information. They understand the importance of analytics and are doing a better job of leveraging that information around most all functional domains — better understanding customers and prospective customers, better understanding their employees, better positioning their products. As executives think about implementing their corporate strategies, they find that this information is a very important enabler.

Merlino: In the IBM report, you describe big data in almost utopian terms, kind of like a magic bullet that can potentially transform business and even society itself. Can you pull that down to the real-life, practical opportunities big data presents to business?
Schroeck: I would certainly hesitate to call it a magic bullet, from the standpoint that there are clearly some challenges here. How do you source the information? How do you filter and analyze the volumes of information to get to the answer you’re looking for, which might be to identify the next best offer to make to a specific customer while they’re on your website or talking to one of your agents. Those are some of the challenges. Having said that, the study clearly showed that big data is delivering real value to organizations across many industries.

ALSO SEE: Part one of the interview with IBM’s Michael Schroeck, Big Data 101: What Is It?     

The third and final excerpt of the dialogue with IBM’s Michael Schroeck focuses on how travel and transportation industries are getting on the big data bandwagon.


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