Big data is likely to be one of the key challenges for companies across a wide range of industries over the next few years as organisations get hold of more information than ever before. The analysis of this data is providing a potentially valuable insight into consumer preferences, behaviours and other key performance indicators (KPIs).
There is clearly a real feeling that the companies well-placed to thrive will be those that really harness the possibilities arising from big data.
IBM and Netflix have already gained a solid reputation for making good use of big data, having amassed huge amounts of information on customers, using it to better tailor services to their needs.
They are by no means the only ones. Organisations from a variety of industries are utilising analytics software to make sense of the sea of figures, identifying key trends and using them to develop corporate strategies.
The approach has the profit numbers to back it up too, with big data helping to generate an estimated $22 billion per year as it stands.
Small business needs convincing
But while there is little doubt that multinational companies are leading the way when it comes to making the most of big data, there is also a great number of benefits available to smaller companies looking to further enhance their profits and reputations.
However, the enthusiasm for big data analysis is perhaps not quite as strong. While 49 per cent of large businesses have implemented solutions for harnessing big data, a recent Tech Pro study claims only one in five small traders have done the same.
One possible explanation is that companies feel they do not accumulate enough data for such practices to be considered viable.
While this assessment carries a certain degree of truth, there is a feeling that the same principles towards consuming data can be applied on a smaller scale, with every statistic and figure potentially carrying valuable information that can be used to great advantage.
For instance, data analysis is a remarkably useful tool when it comes to marketing, which is being used by many smaller businesses, particularly in the increasingly digital age.
Many marketeers are using big data to help unlock one of the most important aspects of their profession; predicting the next transaction of each customer by compiling hugely detailed information.
However, while the ability to predict the next move of a consumer has previously been touted as something of a holy grail for many marketeers, there is a danger that it could be too much of a short-term solution. When every competitor becomes equally good at managing to predict the next move of a customer, marketeers run the risk of essentially competing away their profits from that marginal transaction.
While it may not lead to a sustainable competitive advantage for marketing companies, that does not mean it can be written off entirely.
In order to secure a long-term advantage, marketeers need to look at more strategic questions surrounding data outlining customer behaviour. This means looking beyond the next purchase and examining what will help enhance the potential loyalty of that customer.
Loyalty paying dividends
One industry that has seen particularly strong benefits from using big data for enhancing loyalty is the low-cost airline industry.
Ryanair and easyJet, two heavyweights in the budget airline scene, have both invested heavily in data analytics for their respective loyalty schemes.
The aim is to follow on from the lead of Amazon.com and Tesco by driving profits through leveraging the vast amount of data.
A spokesman for easyJet recently told Reuters there are "exponential" benefits from digitisation and data analytics.
Both Ryanair and easyJet have taken different approaches to data, with the former choosing to use data to focus on the selling of added extras while easyJet has preferred to focus on overall pricing by utilising an algorithm that helps to determine seat pricing effectively and in real time.
Computers are capable of tracking over a billion searches on the easyJet site every year. This enables the company to ascertain the prices, destinations and even travel times that persuaded their customers to either book or leave the website and act accordingly.
Spokesman Paul Moore told Reuters: "We don't have the legacy frequent flyer systems the legacy carriers have, but we have been selling online far longer and at far greater scale than they have," he said.
"The data we have on purchasing patterns and flight patterns is, we suspect, larger and richer by some way."
The role of big data is also expanding in more manual industries. For instance, in the United States, big data has become an increasingly important in adding profits to farmers.
Matt Darr, a professor in agricultural and biosystems engineering at Iowa State University, explained during the Iowa Farm Bureau Economic Summit held recently in Des Moines, Iowa: “Auto steering, fertility practices and seed genetics have been some of the changes we have seen. It’s not a one-size-fits-all for the ways big data will improve each farm.”
The practice of data warehousing, according to Darr, can add value to farmland, help identify better recommendations for soil and land management and compare various areas of performance.
“Farmers should be using production benchmarking to see how their management practices are working on their own farm and how they are working compared to other farmers in the area,” said Darr. “These practices can help farmers understand how to close gaps in their management and become more profitable.”
The relationship between big data and farming may not be that strong right now, but there is little doubt that there are a number of possibilities waiting to be unlocked.
The the emergence of big data is changing the way industries operate. How big an impact it will have on accounting firms remains to be seen but larger firms are already embracing new technologies such as artificial intelligence, machine learning drones and natural language generation. Exciting and challenging times lay ahead.