How firms can benefit from big data: Use analytics to gain a competitive edge

Focus on building an analytics-savvy workforce with a deep understanding of clients’ needs

 

Companies have access to more cheap and useful data than ever before. Business investment in data analysis has also risen dramatically. It crossed the $100bn mark in 2013 and is now expected to grow by around 10 per cent a year through 2017, according to the International Data Corporation. But despite increased talk about the potential of big data, companies have struggled to use it to generate business value. “Analytics created significant competitive advantage in the beginning. Over time, however, competitors build the same capabilities and the advantage erodes,” chief analytics officer at Bank of America Merchant Services Douglas Hague said in MIT Management Review. Here are some ways firms can remain competitive in the age of big data:

 

Big data won’t get you anywhere if you don’t have the right people to turn it into a competitive advantage. A survey of more than 2,700 respondents globally by the MIT Sloan School of Management and SAS Institute found that organisations reaping the greatest benefits from analytics and big data are much more likely to have a plan to develop their internal talent.  

 

Food conglomerate General Mills, for example, realised that it was relying too much on external firms to do its customer research. In 2013, it decided to hire data scientist Wayde Fleener to improve its strategy. According to the MIT Sloan report, he found a bounty of information available, but it was all buried within specific departments and executives hardly used it to inform their decisions. Besides figuring out what the data said about General Mills’s customers, Fleener had to come up with a way to work closely with key executives and bridge the gap between analysts and decision-makers. As the MIT researchers say in their study, companies need analytically-savvy people who also share an intimate understanding of their business and culture.

 

As more companies seek to gain value from big data, the demand for talent has increased. The McKinsey Institute estimates that, by 2018, the United States alone will suffer a shortage of 190,000 skilled data scientists, and 1.5m managers capable of reaping actionable insights from the big data deluge.

 

To help fill this gap in human talent, firms will have to adopt a combination of better hiring techniques and some supplementary training for their existing employees. Internet analytics company comScore, for example, ensures that each of its employees has some level of basic data competence before hiring them. But it also devotes energy to training the existing workforce, regardless of their team or position, according to a recent report by the Center for Information Systems Research (CISR). 

 

Companies have now started to realise that value is often found in interpreting data and presenting it in useful ways for clients to use. 

 

For example, comScore’s capacity to collect and process terabytes of data each day is not valuable in itself. Rather, the company “recognises that data can quickly become overwhelming, and encourages clients to focus on answering a few key questions,” says CISR researcher Renee Boucher. 

 

Because the company’s value creation depends on a deep understanding of its clients, it focuses on making big data consumable and proactively helps clients identify insights they can act upon, she adds.

 

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