Chris Gabriel, VP of Solutions Management at Logicalis Group, explores the world of ‘Big Data’, to look at the impact of ‘internet time’ on decision-making and the increasingly central role of business analytics in driving long term competitiveness.
Every organisation has something inside them that defines its identity. That something might be the key to exploiting or mitigating any one of their strengths, weaknesses, opportunities and threats. For every executive, the question is ‘what is that something?’ But asking the question is the easy bit…
Knowing where and how to find the answers is now stimulating the minds and wallets of the IT industry – the importance of analytics is evidenced by the strategies and investments of some of the world’s biggest IT players. For example, last year HP paid $12billion dollars for a UK analytics business whose revenues were less than a $1billion, a massive multiple and one that shocked the investor community.
These investments and strategies are driven by the emergence of ‘Big Data’. That is, if you are an average mid-sized organisation you’re likely to have around 20 Terabytes of live data storage capacity data in total. But all that data is barely being put to use – some estimates suggest that 90% of all information in an organisation lies unused once 90 days have elapsed since its creation.
So how did you create all that data in the first place? The IDC ‘digital universe’ study suggests that in 2011 the amount of digital information created and replicated will be over 1.8 zettabytes, or 1.8 trillion gigabytes. In that same study, IDC postulates that since 2005, you, the corporate or public sector ICT user has spent over $4trillion on buying ‘more’ technology to expand the digital universe to where it is today. All those emails, spreadsheets and web transactions build up – you’re starting to get ‘big data’.
But when does plain old data become ‘big data’? As ever, the definition is something of a moveable feast, but it’s fair to say that , if the amount of data and data sources you now have is greater than the ability of the applications you have to make sense of it, you have a ‘big data’ challenge.
How then do you make sense of it, and do you really need to? The second part of that question is the easy bit – it’s all about ‘mission critical’ decision-making. By way of an analogy, in the 1970s, John Boyd, United States Air Force Colonel described what he believed was the process that either won or lost pilots precious seconds of differentiation in a combat situation; those who could act quickest won most. The OODA loop was born:
Observe: collect as much situational data as possible
Orientate: analyse that data to form a coherent view
Decide: use that coherent view to decide on a course of action
Act: enable your organisation to act as effectively as possible
That basic approach to data analysis still holds true, but trying to analyse a new world of big data with old tools diminishes the value of that data – and leaves those who can observe, orientate, decide and act faster in a better competitive position.
That ability to rapidly understand and act is the key. Organisations of all persuasions need to act quickly; a sales team needs to know when prospects are at their warmest, humanitarian NGOs compete aggressively to be the first at a disaster scene, automated trading systems need to know the signals that indicate whether to buy or sell a stock, crime prevention forces need to understand where and when crimes are most likely to occur and so on. As ever, the organisation that can act quickest wins, and the benefit of using business analytics is speed.
Analytics is taking hold today because a spreadsheet simply doesn’t cut it in today’s business world. When the world of commerce was conducted in slow motion, the old real-time, knowing how your customers behaved last month or last quarter was fast enough – Now the world is done in ‘internet-time’ knowing what your customers did last quarter is akin to having a doctorate in ancient history.
In an IBM 2011 study of Chief Marketing Officers (CMO), From Stretched to Strengthened, data explosion was ranked as the number one marketing challenge. One CMO commented, “We are drowning in data.” Meanwhile, CEOs rated customer intimacy as their number one priority – over 88% believed that getting close to customers would make their organisations more successful. As the CEO of a national taxation office said in the report, “Our products need to anticipate rather than respond to a request.”
There’s a real indication of where analytics is heading in there. The true holy grail of analytics is to move from analysing the past to predicting the future and, with the vast amount of digital data that you have, every organisation has the opportunity to learn far more about their futures. That development is already a reality in many areas of our lives – data analytics is used to predict everything from the likelihood that we will default on a loan, to the risks of us developing heart disease.
The key message for CXOs right now is, do not ignore the data you already have or you risk being left behind. If you have all this data and you don’t reuse it and reuse it for the benefit of your organisation then WHY did you create it in the first place? To tap into the current concern over climate change, did your organisation really power those computers and storage arrays for the last decade to create and collect data that your business now leaves standing idle? What a waste!
Of course, the ‘right’ analytics solution depends on the nature of your organisation your customers and the business imperatives that will define your success in the coming years. Ask yourself is ‘what do we want to use data for?’, and then find the tools you need to make that data work for you. In general, analytics tools are split into two solutions areas:
- Those that consolidate existing information so companies can ask the ‘why’ question – such as IBM Cognos.
- Tools that combine predictive analytics and business rules to optimise and automate the millions of small decisions made every day – such as IBM SPSS.
The reality is that business analytics is coming, whether we like it or not. Businesses have to start down the road to analytics because customers, your consumers, or your citizens will increasingly demand it. As a result, over the next few years, business analytics will cease to be an ‘executive indulgence’. It will be a ‘must have’ and the organisations that win will be those which use analytics intelligently – to find out what that ‘certain something’ is.
We’ll hear from Chris again soon, when he’ll be giving us his views on the rise of the Digital Native. In the meantime, look out for a two part exploration of datacentre procurement and provisioning, based on the experiences of our latest guest contributor… coming soon.