Big data creating short term opportunities for developers – but long term challenges

(c) Melekhin

The growth and use of big data continues to dominate nearly every business enterprise.

Forbes reports that “making enterprises more customer-centric, sharpening focus on key initiatives that lead to entering new markets and creating new business models, and improving operational performance are three dominant factors driving analytics, big data, and business intelligence (BI) investments today.”

Indeed, “Big Data & business analytics software worldwide revenues will grow from nearly $122bn in 2015 to more than $187bn in 2019, an increase of more than 50% over the five-year forecast period.”

But according to the Harvard Business Review, Big Data’s ubiquity may bring short-term opportunity to many businesses – including app developers and advertisers – but it also can create a long-term challenge for which businesses must plan.

Niraj Dawar is a professor of marketing at the Ivey Business School, Canada and author of TILT: Shifting your Strategy from Products to Customers. Dawar writes: “In the rush to uncover and target the next transaction, many industries are quickly coming up against a disquieting reality: Winning the next transaction eventually yields only short term tactical advantage, and it overlooks one big and inevitable outcome.

When every competitor becomes equally good at predicting each customer’s next purchase, marketers will inevitably compete away their profits from that marginal transaction. This unwinnable short-term arms race ultimately leads to an equalization of competitors in the medium to long term. There is no sustainable competitive advantage in chasing the next buy.”

Dawar suggests that businesses can gain that long-term advantage by rethinking their approach to big data. And sometimes that approach means finding smart ways to aggregate wider pools of information to find intelligent, actionable insights that weren’t otherwise evident.

For example, Dawar recommends that all companies should ask “questions to examine how its big data can create customer value.” These questions include:

  • What type of information is currently widely dispersed, but would yield new insight if aggregated? Is there any incidentally produced data (such as keystrokes, or location data) that could be valuable when assembled?”
  • Is there diversity and variance among my customers such that they will benefit from aggregating others’ data with theirs? For example, a company selling farm inputs (seeds, fertilizer and pesticides) can collect data from farmers with dispersed plots of land to determine which combinations of inputs are optimal under different conditions. Aggregating data from many farms operating under diverse soil, climatic, and environmental conditions can yield much better information about the optimal inputs for each individual farm than any single farmer could obtain from his own farm alone, regardless of how long he had been farming that parcel.”

It’s not hard to see how these questions also apply to the emerging mobile app world.

As Dawar concludes: “The true contribution of big data will reside in creating new forms of value for customers. Only this will allow marketers to turn data into sustainable competitive advantage.”

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