Develop these skills to make the most of Big Data
Leading companies are harnessing massive amounts of data to transform the way they do business and to gain competitive advantage in the process. The focus of Big Data, as it is called, has now switched from internal decision support to creating new products and services to help companies stay ahead of the competition.
So says Tom Davenport, a professor of management and information technology at Babson College in Wellesley, Massachusetts, who recently shared some examples of companies that are breaking new ground, thanks to their use of Big Data.
Biotechnology company Monsanto has used data to create precision agriculture products that tell farmers exactly when to carry out a particular process, such as adding water, fertiliser, or insecticide to crops.
Using package flow data and telematics from its delivery trucks enables UPS to perform real-time dynamic routing. This innovation is expected to save the shipping company half a billion dollars in fuel and labour costs each year.
The insurance industry has also taken advantage of developments in analytics to create usage-based policies for drivers. On-board computers provide details of braking and accelerating habits, distance travelled, the time of day journeys are made, and the class of road the vehicle travels on, to calculate risk. New cars in the EU will be equipped with this technology starting in 2015.
Cisco Systems uses buyer propensity models to calculate how likely customers are to buy its products and services. Prospect analysis helps the company determine where to direct sales efforts to achieve the best results. The wealth of data available has allowed the company to “industrialise” model building and analytics, and Cisco now has more than 30,000 propensity models to use in these calculations.
Build analytical capability at an organisational level
The potential is huge, but many organisations have yet to harness the power of analytics.
A survey of 2,000 professionals conducted by the American Institute of CPAs and the Chartered Institute of Management Accountants found that 86% of organisations are struggling to get valuable insights from their data.
The first step to building analytical capability at an organisational level, according to Davenport, is clean, common, accessible, integrated data. If the data are to yield some strategic advantage, they have to be unique in some way. Unique data provide unique outcomes. The data should also be integrated across the organisation, rather than exist in separate pockets.
A clearly defined target or objective is another essential ingredient. For example, do you intend to use the data to build better customer service or increased loyalty?
Finally, Davenport advises, adopt some of the open-source tools and platforms that allow companies to analyse data, such as Hadoop, Pig, and Hive. (Hadoop is a platform; Pig and Hive are tools that can be used to run queries of the data on that platform.)
Pathway to Big Data
A new CGMA briefing, Readying Business for the Big Data Revolution, outlines the skills individual finance professionals must develop to help their company capitalise on the opportunities offered by the developments in data analytics.
- Brush up on your statistical skills. Statistics form the basis of many analytical models.
- Get familiar with the jargon.
- Gain a strategic awareness and understanding of the organisation’s business model by reading articles and industry white papers.
- Effective communication is the key to implementing analytics, so understand the basics of visualisation, what tools are available, and how they can be used. Develop your communication skills to present your insights in a compelling way.
- Attend seminars and workshops to learn more about the way data are used. These events also provide the opportunity to meet other professionals who are using analytics and exchange ideas and experiences with them.
Reflect on your company to:
- Consider how developments in the field will impact the role of management accounting in the business.
- Identify the key questions for the business and the data needed to answer them.
- Work with colleagues who are already using Big Data/analytics to understand the outcomes they wish to achieve.
- Establish good relationships and partner with your IT team and data scientists.
- Gain an understanding of the organisation’s data sources and analytical techniques.
- Become the go-to person on your team for data analytics. Identify how your team or business function should use Big Data.
—Samantha White (email@example.com) is a CGMA Magazine senior editor.