This paper describes how to develop a strategy to harness the power of big data by linking the benefits to the company's financials. That way, address the issue of "how can big data help me make more money for my shareholders". About the author: Ranadip Chatterjee, a big data consultant, has over 12 years experience in the IT industry working with clients in diverse industries. He also holds an MBA from the London Business School
Original Title
Taming Big Data - Addressing the CEO's Dilemma
This paper describes how to develop a strategy to harness the power of big data by linking the benefits to the company's financials. That way, address the issue of "how can big data help me make more money for my shareholders". About the author: Ranadip Chatterjee, a big data consultant, has over 12 years experience in the IT industry working with clients in diverse industries. He also holds an MBA from the London Business School
This paper describes how to develop a strategy to harness the power of big data by linking the benefits to the company's financials. That way, address the issue of "how can big data help me make more money for my shareholders". About the author: Ranadip Chatterjee, a big data consultant, has over 12 years experience in the IT industry working with clients in diverse industries. He also holds an MBA from the London Business School
Working with big data as a consultant developer and architect
for many years, I have come across di!erent variants of big
data strategies. I have seen both sides " projects failing to meet management expectations and abandoned as well those labelled thumping success and had a clear and signicant positive impact on the bottom line. And thus are born the skeptics and champions of big data. While interacting with my fellow mates at London Business School, most of whom are at various levels of management in their respective organisations, I realised the wide gap in understanding big data that exists between the management and the technical big data professionals. Having the privilege of exploring both sides of the divide, I put my learnings as a big data consultant in the perspective of the manager. Here I present what I hope will be an easy read for the management and help them avoid some common traps and potholes $sinkholes?% in navigating big data. Hopefully, this will enable more companies to experience the benets of big data by learning from others failures " and successes.
1 Ranadip Chatterjee Taming Big Data What is Big Data 3 Vs, 4 Vs, 5 Vs - you have had it all! Truth be told, the denition is little more than an academic exercise. For the top management, big data is a big opportunity to re-evaluate how more value can be squeezed out of existing resources, specically data. Its about realising data as an asset. Nearly all mid to large size businesses, and many small ones too, have big data in some form. Isnt it just a IT problem Nope, thats the biggest myth that is causing a lot of heart burn. It is, in fact, an opportunity for the business managers. Opportunity to harness some un-captured value out of its existing data assets. Opportunity to expand revenue base, reduce cost or increase ROI from new investments by employing new age techniques, even new sources of data.
Big data is a business problem having a technical solution ADDRESSING THE CEOS DILEMMA TAMING BIG DATA Ranadip Chatterjee Can my business gain !om big data Nearly all mid to large businesses are capable of deriving some, often a lot of, benets out of big data. However, as with any initiative, this will need some investment. The size of the investment and the magnitude of the resulting benets, in other words the return on the investment $ROI%, is dependent on various factors. Some of these factors are direct, like industry, operations, sales channels or even the business model. For example, media and advertising companies have reaped bigger benets from big data than manufacturing companies in general. Similarly, B2C companies have found it easier to extract better benets than B2B companies. However, some factors are not so direct, like decentralisation of control and systems, corporate inertia, competitive rivalry across divisions, even regulations. For example, it can be very di&cult to consolidate disparate small datasets across business units in a decentralised rm into a unied big data platform as business units may perceive such centralised systems as a threat of loss of control $of data% and hence oppose such moves. Again, in large behemoths, often corporate inertia can cause a feeling of complacency such that ground units think all is good and there is no need to make any changes. Sometimes, regulations around data movement and privacy can come in the way of data unication that is common in big data projects. In these cases, the benets from big data can be signicant, but di&cult to realise due to such factors. In summary, the cost and benets can be very rm"specic. The key is to get an understanding of the potential benets and likely investment required. This requires people with deep understanding of the business to come together with those that understand the capabilities of big data. Some common easy wins from big data I have seen are: " Lower data storage costs. Big data storage is generally cheaper " Lower licensing and maintenance costs by consolidating multiple systems into one big data system. This also results in simpler systems that are easy to maintain and operate. " Higher returns on promotional and advertisement spends by better targeting well dened customer segments. However, these are by no means the biggest or best benets of big data. 2 Ranadip Chatterjee Taming Big Data Case Study 1: Tesco estimates !20m savings from in cooling costs In a pilot conducted by Tesco*, it identied that by analysing sensor data from its refrigerators in a centralised big data system, it can optimise various aspects like temperature, run time and start time of refrigerators at its stores. This was estimated to result in 20% savings in the cost of cooling, which was equivalent to ! 20 Million throughout its stores in UK. * News published on www.computerweekly.com on 22 May 2013 titled Tesco uses big data to cut cooling costs by up to !20m"
Case Study 2: News company uses big data to increase average time customer spends on its website A popular news and media company in UK consolidated its user and activity data across platforms to better track and analyse what drives customers to come back and stay on its website. More time spent by users equate to more advertising revenue. Also better customer insights means better ad targeting and hence better ROI for the advertiser, resulting in more repeat business. Making the blueprint By far the most important step in the big data journey is to decide where to start and how to go forward. Like every important business initiative, it is important to manage the investors expectations for returns. Big data is no exception. So it is important to know how much return to expect, from where and how before diving deep into it. This is a two"stage process; almost two di!erent sub projects " the exploration stage and the execution stage. Exploration In this stage, the potential returns have to be identied. This includes answering the questions how much return to expect, from where and how. Execution When a road map has been clearly established following the exploration stage and the potential gains identied, its time to go and execute the how " the deep dive if you will. It is possible that a company chooses to go through multiple iterations of the above stages, and quite often that is what happens, either by choice or otherwise. But it is still quite important to maintain the distinction between the two at every step. That is because the two stages need di!erent approaches, di!erent set of tools and di!erent expertise. Mixing the two is often the cause of projects falling in the crevice in between the two cli!s. From the top managements perspective, the exploration stage is where close involvement, encouragement and monitoring is important. The steps could be as follows: " Understanding the revenue and cost sources in the business " Understand where data"driven decision making exists. These can be areas of low hanging fruits, potentially providing quick returns " Understand where manual processes are used for decision making. These can further be divided into procedural and judgemental. Procedural processes can also be easy wins $may or may not be big data use cases but the business gains anyway if additional e&ciency could be identied%. Judgemental processes can benet from unstructured data analysis techniques in big data. There could be signicant benets to reap from such processes though they are likely to be harder to achieve. " At each of the processes in the step above, map the current processes back to P&L and estimate how the added benets of big data can impact that number $with condence gures%. Also identify how long and what resources will it take to realise the gain. The cost can be estimated from that. 'Caution: This will be an intense and time consuming step, but a very important one( " Once this information is presented back to management, its up 3 Ranadip Chatterjee Taming Big Data Case Study 3: Churn prediction by popular mobile/VoIP operator Many major telecom providers including Skype, T-mobile and Celcom have used big data analytics on Call Data Record logs to understand and predict churn and customer life-time value, among of the biggest factors affecting revenue in that sector. This has enabled them to personalise and focus attention and promotions precisely where it matters most.
Case Study 4: Fraud detection by banking and insurance firms Analysing incoming transaction streams in real-time have helped banks detect and stop fraudulent transactions. Similarly, analysing transaction as well as social data patterns using big data have enabled banks, insurance companies and even social benets departments in governments to detect fraudulent claims. It is estimated that worldwide retail banking losses from fraud is over $100 billion. So there is a lot of potential here. to the management to pick and choose the appropriate opportunities. Inputs from a big data expert could help to identify synergies among di!erent options. " For each selected option, identify the key KPIs, nancial targets and deliverables that will help track the execution. Dene scope and success. That will help eliminate unnecessary digression during execution. )Digression is allowable during exploration, not during execution( That leads us to execution: " In almost all cases, big data benets are optimal at large scale. Centralised infrastructure and architecture, consolidated data storage and computation are often the best ways to harness the benets of big data. So, it is benecial to create a role that will own the centralised framework and co"ordinate with various business units to enable them build their systems on top. Many rms call this role the Chief Data/Digital O&cer or Chief Architect. Some even make this person the owner of the execution stage, which is ne if the role is su&ciently empowered. " Hand over the targets, deliverables and KPIs to the revenue or cost centre that will benet from the initiative. Allocate appropriate funds. " Monitor the progress, tweak KPIs, if required, based on new lessons and information. The momentum and enthusiasm needs to be maintained as is the case for any new business initiative. " Focus should be on small measurable achievements that can be linked right up to the nancial statements. Agile development processes usually help here. " Encourage the team to announce technical successes to the technical community. The big data community is pretty vibrant. Not only does the recognition give a boost to the team, it also allows for genuine feedback and improvements to make their way into the project.
I will end with this nal observation: The big data journey usually turns out to be a signicant step within the organisation. So, strong backing and encouragement from the top management, including the CEO, is vital to reap the best possible benets from it. Half" hearted attempts usually dont go far and are not worth the trouble. 4 Ranadip Chatterjee Taming Big Data Avoid Delegating exploration: Delegating this stage completely to IT personnel without high level involvement from business is likely to have modest success at best Jumping into implementation: Without establishing clear nancial targets, time lines and resource requirement, jumping into implementation can hurt Slack in monitoring: Financial targets and time lines should be closely monitored to avoid unplanned diversions Mixing exploration and execution for reasons mentioned aside
Do Allow unrestricted exploration: Let ideas y, barriers break, lines blur. This is a discovery phase after all Understand the expected benets to business clearly before embarking on execution Promote these benets down the org chain to get buy-in at all levels. Inertia will make it difcult unless strong encouragement from the top is there Celebrate accomplishments in public. Its a vibrant community out there with lots to gain. Ranadip Chatterjee (ranadip.c[at]gmail.com) is a consultant in Big Data strategy and implementation. An Ex-Yahoo engineer, he has spent over 12 years in IT in engineering, management and consultant roles. He has a Bachelors in Engineering and holds an MBA from the London Business School.