How to get more from your data

Six ways to climb aboard the an­a­lyt­ics train

Idealog - - CONTENTS - TEXT BY BILL BEN­NETT IL­LUS­TRA­TION BY TANE WIL­LIAMS

In the 2011 movie Money­ball, Brad Pitt plays Billy Beane, the gen­eral man­ager of the cash-strapped Oak­land Ath­let­ics base­ball team. Us­ing a heap of pre­vi­ously-ig­nored player sta­tis­tics, Beane buys up un­der­val­ued play­ers no one else wants – and goes on to win the league. High-five for clever data.

THE MONEY­BALL HY­POTH­E­SIS ( that a data- driven cul­ture pro­duces more suc­cess­ful com­pa­nies) is in­creas­ingly be­ing shown to be true – by sta­tis­tics, of course.

An Economist In­tel­li­gence Unit re­port: The de­cid­ing fac­tor: Big data and de­ci­sion-mak­ing, found com­pa­nies mak­ing de­ci­sions backed by data per­form 5%-6% bet­ter than those who make de­ci­sions backed by – well other stuff.

Mean­while, the same sur­vey showed com­pany per­for­mance im­proved 26% over three years when big data an­a­lyt­ics was be­ing used. Think Ama­zon or Face­book.

A sep­a­rate EIU re­port sug­gested top- per­form­ing com­pa­nies are more likely to be good at us­ing data; low-per­form­ing ones are likely to be bad at data stuff.

In many ways, the oft-touted “in­for­ma­tion age” has been a long time com­ing. But af­ter a lot of false starts and tril­lions of dol­lars, we fi­nally got there.

To­day busi­nesses de­pend on com­put­ers sift­ing through vast piles of data. They del­e­gate de­ci­sion-mak­ing to al­go­rithms that choose what to buy and sell, who to trade with and so on.

The key that turns raw data into in­for­ma­tion is an­a­lyt­ics. It’s a dis­ci­pline that’s been around since com­put­ers used punched cards, but to­day’s vast data lakes make it newly

rel­e­vant. Data an­a­lyt­ics is hot and has al­ready had a pro­found ef­fect on busi­ness, healthcare, science, en­ter­tain­ment and gov­ern­ment.

Much of the noise sur­round­ing data an­a­lyt­ics fo­cuses on what hap­pens at the big end of town, where cor­po­ra­tions and gov­ern­ments deal with vast quan­ti­ties of in­for­ma­tion.

That’s a dis­ci­pline in its own right known as big data (see page 54).

Michael White­head is CEO and co­founder of Where scape. In his words, the Auck­land-based busi­ness “is 100% about an­a­lyt­ics”.

While he is wary of the term big data, de­scrib­ing it as “largely a sup­ply-side phe­nom­e­non”, his com­pany is recog­nised as a global player in the data space, with am­bi­tions to chal­lenge large IT in­cum­bents like Or­a­cle and IBM. SO HOW DO YOU GET TO BE A DATADRIVEN COM­PANY? White­head says com­pa­nies should look to their own re­sources first.

“You get the big­gest bang for your buck when you dig into the data you al­ready have. It could be cus­tomer data or trans­ac­tion data. A telco will have call records, a re­tailer will have sales records and an air­line knows who has flown where. This is all some­thing no one else has.

“Big data starts when you add in ex­ter­nal data. A clas­sic ex­am­ple might be to use sen­ti­ment anal­y­sis taken from what peo­ple are say­ing on Twit­ter. There’s value where that in­ter­sects with your own data.”

White­head says New Zealand com­pa­nies are up with the play when it comes to us­ing big data, but are be­hind in

“TOO OF­TEN NEW ZEALAND COM­PA­NIES ARE STUCK WITH THE IDEA OF HEROIC DE­CI­SION MAK­ING WHERE THE BRAVECEO GOES OUT ON A LIMB . THEY’RE NOT LOOK­ING TO USE DATA AS A DIF­FER­EN­TIA­TOR .”

MICHAEL WHITE­HEAD, WHERESCAPE

cloud apps, sells them, then in­te­grates the apps into a dash­board that gives own­ers and man­agers a one-stop over­view of their busi­ness. The most ob­vi­ous ad­van­tages of this ap­proach are one in­voice for ev­ery­thing and a sin­gle sign- on. Users don’t have to log in and out of var­i­ous cloud apps all day.

This model gives 9Spokes ac­cess to data from lots of com­pa­nies and that al­lows for a fea­ture it calls peer track­ing. In ef­fect you get to see how other com­pa­nies in your sec­tor are per­form­ing. The data is ag­gre­gated and made anony­mous so a cus­tomer can’t iden­tify a ri­val’s per­for­mance.

If, say, you run a café, 9Spokes’ peer track­ing can tell you how much busi­ness was up or down at the other cafés in your town over a long week­end. Bench­mark­ing per­for­mance in this way is a pow­er­ful tool for plan­ning and im­prov­ing a busi­ness.

Armed with timely in­for­ma­tion, com­pa­nies can au­to­mate, or neara-uto­mate re­sponses. The player in any mar­ket with the fastest re­ac­tions to chang­ing con­di­tions has a solid com­pet­i­tive ad­van­tage.

“DATA IS PAR­TIC­U­LARLY USE­FUL WHEN IT COMES TO CHANG­ING CUS­TOMER BE­HAV­IOUR . THIS IS SOME­THING SU­PER MAR­KETS LIKE COUNT­DOWN DO BADLY WITH THEIR CUS­TOMER CARD S AND DIS­COUNT VOUCH­ERS , BUT THAT TEL­COS DO RE­ALLY WELL .”

their big pic­ture think­ing.

“Too of­ten they are stuck with the idea of heroic de­ci­sion mak­ing where the brave CEO goes out on a limb. They’re not look­ing to use data as a dif­fer­en­tia­tor.”

The roll call of New Zealand com­pa­nies that White­head says do see data as strate­gic reads al­most like a list of the bright­est tech stars. He names Xero, Orion Health, eRoad and Wyn­yard Group.

“Xero is start­ing to put data at the core of its busi­ness. Orion’s IPO was all about data. eRoad never talks about any­thing but data.

“Data is par­tic­u­larly use­ful when it comes to chang­ing cus­tomer be­hav­iour. This is some­thing su­per­mar­kets like Count­down do badly with their cus­tomer cards and dis­count vouch­ers, but that tel­cos do re­ally well.”

White­head sin­gles out Spark as a New Zealand com­pany do­ing in­ter­est­ing things with its own data. Last year Spark Dig­i­tal Ven­tures formed its own data con­sul­tancy: Qri­ous. One of its first cus­tomers was another Dig­i­tal Ven­ture busi­ness: Skinny Mo­bile. Qri­ous helped Skinny learn which add-on prod­ucts sell to which cus­tomers, what plans and of­fers draw in new busi­ness and what does and doesn’t work in the busi­nesses’ re­tail out­lets.

Skinny shows you don’t have to have a bil­lion dol­lar turnover to make data work for you, White­head says.

The busi­ness is run on a tight bud­get and doesn’t have much in the way of in­ter­nal staff or com­put­ing re­sources – be­fore hir­ing Qri­ous it was us­ing Ex­cel to sift through data.

MICHAEL WHITE­HEAD, WHERESCAPE

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