Big data is a big buzz word in business technology these days, but it’s a concept not widely understood and the name alone has many small business owners asking the question, “Is big data too big for me to tackle?” The simple answer is no. Big data is here to stay and no business is too small to take advantage of it.
So, in short, what is big data? According to an article in Forbes, definitions can vary widely, but technology thought leader Gil Press says that first and foremost it is an attitude shift. Primarily, it is an attitude that bigger is better; that combining data from multiple sources – from both inside and outside the enterprise – can lead to better decisions.
Gone are the days when just analyzing your own sales, inventory and other internal metrics were enough. Savvy businesses are successfully mining big data to cross-reference their internal information with multiple outside sources in order to increase revenue by understanding customers’ behavior better, reducing costs by eliminating inefficiencies and human bias, strengthening client bonds by anticipating clients’ needs, enriching service offerings with new knowledge, and giving employees new tools to perform their jobs better.
While all of that sounds great, it helps to know how to get started. It’s easier than you’d think. Google Analytics is an easy way to track visitors and activity on your website. Experian lets businesses check on their competition through credit scores.
For more complex data crunching, small businesses can get help with software from a wide range of vendors – from established giants such as IBM, SAS, and Microsoft to startups such as Tranzlogic and Kaggle.
One trend that is making it more affordable for small businesses to compile and analyze these huge pools of data is what is being termed Big Data as a Service, or BDaaS. It is estimated that by 2021, the global BDaaS market could be $30 billion.
Amazon’s AWS as well as Google AdSense and AdWords – services already being used by thousands of small to mid-sized businesses to host data infrastructure and target their online marketing – are better known services that would fall under the banner of BDaaS.
The investment in big data is paying off big time. Take the retail industry, for example. A Mckinsey Global Institute showed that retailers who used big data analytics yielded a 60% boost in margins and a 1% improvement in labor productivity.
And according to analysts, smaller firms are not just adequately equipped to take advantage of big data benefits, but are actually in prime position to lead with it.
“In many ways, big data is suited to small business in ways that it never was for big business – even the most potent insights are valueless if your business is not agile enough to act on them in a timely fashion. Small businesses have the advantage of agility, making it perfectly suited to act on data-derived insights with speed and efficiency,” said data consultant Bernard Marr, quoted in Business Standard.
Experts say the most important success factor is knowing the problem you are trying to solve. Use the scientific method when starting to use big data — come up with a hypothesis and use the data to see if you are correct. Then when you have your answer, leverage the findings to take concrete actions. It’s crucial that all parts of the company – information technology, marketing, sales and operations – are working together toward a common goal.
Kevin Kelleher highlighted in a recent Inc. article two examples of how smaller businesses are using big data. One example is a local realtor who is using business analytics tools to offer homeowners rental pricing recommendations pinpointed down to the week, based on market conditions, seasonal trends, size and location of a home, and other criteria. The results have been substantial. The realtor increased its property management portfolio by 10 percent over three years, while cutting costs by 15 percent a year. Its technology investment paid for itself within the first 12 months of implementation.
A second example is a zoo that used local climate data collected by the National Weather Service to better anticipate attendance on any given weekend. This helped the zoo determine, down to the hour, how many employees were needed for staffing front gates, carousels and other positions. By using big data, it was able to cut operating costs without reducing the level of customer service.
Right now, no matter how small your business is, big data is a good way to give your company an edge. In the next ten years, with the growth of available data and analytical tools, it could become a de facto part of doing business.
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