Advanced Practices Council Insights This first issue highlights research presented to Advanced Practices Council (APC) members at the October meeting. The key theme emerging from the meeting is exploiting big data to realize business value.
Driving Capability of Big Data
When the 3 million gigabytes of digital data created each day are viewed as resources for gathering new insights on customer behavior and transforming businesses, they present a positive disruptive force. McKinsey predicts that big data will soon become a major basis of competition, spurring new waves of growth, productivity and innovation. Realizing this potential requires different ways of thinking and acting. New types of data already enable better predictions about markets and customer behavior. For example, monitoring Google housing searches delivers better predictions than analyzing previous sales patterns. Accelerometers on smart phones can predict medical developments such as depression and post-traumatic stress disorder before they are detected through other means.
The Emerging Chief Data Officer
Leading organizations in financial services (CitiGroup, Bank of America, Morgan Stanley, VISA International, TD Ameritrade, Federal Reserve Board), healthcare (National Institutes of Health, Seattle Children's Hospital) and IT (SAP, Microsoft, Yahoo) have recently appointed Chief Data Officers (CDOs) to lead innovation in exploiting big data. These CDOs lead enterprise-wide governance, cross-functional collaboration, and usage of data as an asset, reporting in some cases directly to the CEO. Needless to say, the skills needed for success are wide-ranging and not easy to find in one person. But studies indicate that firms with executives responsible for data leadership achieve higher financial performance than their peers.
Assessing Your Firm's Readiness to Exploit Digital Data Streams
Exploiting digital data streams that your firm generates or aggregates from multiple sources requires four sets of capabilities. Mindset capabilities include the willingness of organization members to pursue innovative approaches and potentially risky change. Skillset capabilities include specialists such as data scientists and data analysts as well as those who can coordinate the wide range of needed organizational resources. Dataset capabilities facilitate creating, identifying, intercepting, and accessing the relevant digital data streams. And toolset capabilities include needed hardware and software tools. Researchers Gabriel Piccoli and Federico Pigni created a readiness instrument that integrates these four sets of capabilities and allows APC members to benchmark and assess their firms' readiness to fully exploit digital data streams.
Creating Insights that Spur Action from Big Data
According to Barbara Wixom of MIT's Center for Information Systems Research, the firms that drive the most value from their investments in big data initiatives are those that focus first on the value they want to achieve from applying analytics to their data.. Value can range from strategy and innovation enablement and improved reputation and decisions, through process and resource optimization, better information, and reduced IT costs. Wixom identified three sets of practices that facilitate driving action from insights derived through analytics:
1. Client-centric development practices. These engage users actively while business intelligence tools and services are developed. They include agile development, co-location, shadowing, and locating business intelligence delivery in business units.
2. Hybrid roles and people. Business-savvy IT people and IT-savvy business people can be located or developed through hiring for the right mix of skills, staff rotation, "power client" identification and development, and business unit-located business intelligence development.
3. Value-oriented governance. Business-led groups and steering committees, road shows, knowledge-sharing portals, and retrospectives help drive action and value.
Leapfrog Competition by Fast-Tracking Analytics Capability
Barbara Wixom, an expert in business intelligence, noted that some leading firms are buying analytics capacity and solutions from external providers to enhance speed-to-market either while they build their internal capacity or in lieu of doing so. Examples include software-as-a-service fraud detection, dashboard and scorecard development, and adding external data to augment customer records.
Consider Hertz, which exploits big data to provide customers improved "carfirmation" with features such as real time upgrades that enable customers to swap or upgrade their rental car using their mobile phone. Hertz supplements its in-house analytics resources, data warehousing platform, business intelligence power clients and data scientists with external analytic capability. For example, using IBM Content Analytics software together with a sentiment-based tagging solution from Mindshare Technologies, Hertz introduced a "Voice of the Customer" analytics system that automatically captures customer experiences in real-time, transforming the information into actionable intelligence. Using a series of linguistic rules, Hertz's "Voice of the Customer" system categorizes comments received via email and online with descriptive terms such as vehicle cleanliness, staff courtesy, and mechanical issues. The system also flags customers who request a callback from a manager or those who mention #1 Club Gold, Hertz's customer loyalty program.
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