Businesses from everyday product suppliers to the world’s largest retailer have been caught up in the information craze known as “big data."
The “big data” market stands at more than $5 billion based on related software, hardware, and services revenue. But industry expectations are a 58% compound annual growth rate that will push revenue to $50 billion by 2016, according to Wikibon.
The rapid growth in “big data” vendors has also brought the cost down which can now allow smaller companies to participate.
The pay-off from joining the “big data” movement and analytics management revolution is no longer in doubt but the a recent report from McKinsey & Co. notes most companies don't yet have a plan for what to do with all that information.
Experts in the field encourage businesses to nail down a plan that is complete with goals and objectives the data collected must meet. Paring down data collection is also a good idea, looking for the most relevant content for driving future business.
McKinsey notes businesses from many sectors can benefit from “big data” applications, when they have the right plan in place for information collection and application. That could be something as simple harnessing social media to draw consumer insight and preferences.
Suppliers like Frito Lay gather “big data” to chose new chip flavors based on a Facebook application shared among its fan base. Banking could benefit from using big data to create near instant loan approvals and keep rates flexible based on live market data.
Health care could use "big data" to provide real-time diagnostics.
Manufacturing is using text analytics to help identify product defects which reduces losses.
Retail is using balancing point-of-sale data against production and logistics to minimize inventory and keep down operating costs.
Utility companies are using smart meter analytics that optimize rates and maintain load-balance on the grid.
Roughly 6 million people walk into a Walmart Store each day and the retailer, like many of its competitors, is closely watching what is bought, how much time is spent in certain departments and whether or not shoppers are using their smart phones while in the store.
Wal-Mart and much of the retail industry and its supply chain are mining information in hopes of better understanding what consumers want. The mega retailer recently acquired a big data startup, Inkiru.
Wal-Mart spokesman Ravi Jariwala said, “Inkiru's predictive analytics platform will enable Wal-Mart to further accelerate the big data capabilities built out by @WalmartLabs."
He said Iriku insights will be used to extend the business impact in search, personalization, marketing, customer segmentation and merchandising.
In other words, Wal-Mart continues to dig down into the weeds trying to apply the knowledge gained from data mining to enhance product selection and customer experiences with a goal of selling more.
Memphis-based AutoZone has also joined the “big data” revolution using software that crunches information in local areas such as the kinds of cars people drive in Northwest Arkansas or the air-freshener fragrances preferred in Little Rock. The auto supply retailer uses the data to localize certain product offerings that appeal to the demographic near each of its stores.
Supply chain management experts at the University of Arkansas have said the timing for data collection is ripe. While data have been available for years, processing power and storage space has finally become cheap enough. That, and better algorithms combined with the pervasiveness of social media create opportunities for enormous insight into consumers minds.
SMALL BIZ STANDOFF
While large companies have been wrangling big data from several years, smaller firms have been slower to the take.
Intuit recently surveyed 500 small businesses found 15% who said using big data was still too expensive. Another 14% expressed they did not have the time to use it, and 10% admitted they don’t understand how big data can help their business.
Karen Mills, administrator with the Small Business Administration, said small businesses need not be intimated by data analytics because there are free or inexpensive tools available by the SBA to help business owners gather data and better understand how to use it to increase profitability.
"One of the early providers of big data to small businesses was Google, whose Adwords, Adsense and Analytics products give small businesses rich insight into their online presence," Mills said in a CNBC interview Thursday (June 20).
Mills said technology is the great equalizer for small businesses, using the example of how radio frequency tagging has helped small suppliers track their products through the supply chain.
She said small businesses can also take part in “big data” by outsourcing their marketing to third party providers who use data analytics and social media platforms.
“Big data is not just for big business,” she said.