Reshaping decision-making key to exploiting big data
Dubai, August 10, 2014
To tap the potential of big data, organisations must reshape their decision-making culture to allow senior executives to make more judgments based on clear data insights, according to a study by management consulting firm Strategy&, formerly Booz & Company.
Executives must harness the data explosion by quickly and accurately identifying data that can improve organisational performance and access to new revenue pools.
Big data can potentially enable companies to increase top-line revenues by providing better and more timely insights on target consumers, the study further said. Outlining an action plan for achieving big data maturity, Strategy& said key factors in assessing maturity levels include environment readinesthe extent of legal and regulatory frameworks and ICT infrastructure; internal capabilities; and the many methods for using big data.
“Despite the rapid growth of big data, organisations should keep its influence in perspective,” said Bahjat El-Darwiche, a partner with Strategy&.
“Although remarkable, the big data phenomenon is merely the continuation of a journey in which ever-more-elaborate data has influenced decision-making. Executives must focus on carefully formulating the business questions that enable the swift and accurate identification of those nuggets of data that they believe can improve their organisation’s performance or allow them to gain access to new revenue pools.
“At the same time, they must encourage governments to nurture an environment conducive to the exploitation of big data,” he added.
THE MATURITY STAGES
Companies need to understand their maturity level in managing and leveraging big data in order to undertake initiatives to exploit its transformative potential, according to the Strategy& study.
“Depending on the maturity of an organisation’s capabilities, big data can significantly increase top-line revenues and markedly reduce operational expenses,” explained Walid Tohme, a partner with Strategy&. “The path to business model transformation, the highest level of maturity, promises potentially high returns but often involves major investment over many years.”
The first maturity stage, performance management, enables executives to view their own business more clearly through, for example, user-friendly management information dashboards. This stage typically relies on internal data, with an organisation establishing key performance indicators (KPIs) to evaluate its success at achieving stated goals.
During the second stage, functional area excellence, organisations start to experiment with internal and external data to improve selected facets of their business. This may involve sales and marketing techniques such as customer segmentation and targeting, or entry-stage analytical methods for product recommendations.
In the third stage, value proposition enhancement stage organisations start to monetize big data, positioning it as a value driver of the business that offers a new source of competitive advantage beyond the mere improvement of operations or services. In many instances, this involves obtaining data from external sources and deriving related insights. This may include innovations such as customized, real-time recommendations or the personalization of services to augment the customer experience.
In the final maturity stage, business model transformation, big data permeates the whole organisation. It becomes deeply embedded within the operation, determining the nature of the business and the mode of executive decision-making. This stage can be reached by both product and services organisations alike.
Despite widespread interest in data-driven decision-making in one form or another, companies face many potential pitfalls in extracting the maximum commercial benefit from big data usage. Some of these relate to their own internal systems and culture; others are tied to the external environment.
“The most prominent obstacle is the shortage of available talent specializing in data analytics — data scientists with an advanced education in mathematics or statistics who are also able to translate raw data material into exploitable commercial insights,” said El-Darwiche. “Although many educational institutions have now started to establish courses to address this scarcity, the market demand is already considerable.”
A MATURITY FRAMEWORK
Organisations need to understand where they are in terms of big data maturity, an approach that allows them to assess progress and identify necessary initiatives.
“Assessing maturity requires looking at environment readiness, how far governments have provided the necessary legal and regulatory frameworks, and information and communications technology (ICT) infrastructure,” said Tohme.
“It is important to also assess an organisation’s internal capabilities, how ready it is to implement big data initiatives and the many and more complicated methods for using big data, which can mean simple efficiency gains or revamping a business model. The ultimate maturity level involves transforming the business model to be data-driven, which requires significant investment over many years.”
Research firm IDC forecasts the market for big data technology and services to reach $16.9 billion by 2015, up from $3.2 billion in 2010. This represents a 40 percent annual growth rate, seven times the rate for the overall ICT business. This trend is affecting all regions.
Over 40 percent of chief information officers in the Middle East, according to IDC, were considering big data technology investment in 2013. – TradeArabia News Service