By David Stokes
The advent of the internet changed modern day lives irreversibly but the new game-changer is already here: mobile digital technology is changing the way we buy, learn and interact with each other. Below David Stokes explains why data is key for businesses navigating the digital era.
Times are hard for the modern day Luddite – an unstoppable wave of digitisation is sweeping the corporate world, and embracing new technology is the only lifebelt available to business leaders.
Everyone is spending more time – and money – online, with more than half a billion internet users in Europe. The global number of smartphones is expected to exceed the world’s population this year. Europe is at the heart of this growth, with seven countries registering more than 90 percent internet penetration and mobile data consumption rates expected to see a seven-fold rise by 2018.
However, this purely digital market requires a new model of engagement; one that allows businesses to connect and collaborate without getting buried by a data deluge or being left vulnerable to attack. Supporting the growth of online commerce has also created a business within itself, as companies look to technology experts for expertise, innovation, and security.
Without doubt, business leaders sense the changing dynamic; 4,000 C-level executives participating in a recent IBM survey consider technology the single most important external force shaping their organisations and their business strategy. Underpinning this statistic is the combination of four fast-moving, disruptive technology forces – social, mobile, cloud and analytics – all driven by the explosion of data and fuelling the next era
A New Natural Resource
Just as steam, oil, and electricity revolutionised the industrial age, data is a vast new natural resource. Once refined by analytics technology, it has the potential to transform industries and societies. Online interactions are generating a huge volume of information and insights – last year’s mobile data traffic was nearly 18 times that of the entire global internet in 2000, and monthly global data is expected to surpass 15 exabytes by 2018. The challenge to businesses is therefore not the availability of data but its application – finding the needle of useful information in a binary haystack.
Analytics technology is driving innovation right across the commercial landscape – and this innovation isn’t just the domain of startups. The goal of any business is to create value for its customers, shareholders and employees. Those that succeed are those that will leverage the digital age to continuously transform and fulfil unmet customer needs — no matter what product or service they offer, from the smallest of startups to the biggest multinational companies. All businesses are in the business of innovation, and to pursue this they cannot afford to neglect data; old-fashioned gut instinct is no longer enough. Analytics technology holds the key to unlocking new business insights and offering customers a new and differentiating product or service.
Take the example of an electric grid operator who needed to deliver a $1 billion cost reduction in line with regulatory requirements. With asset maintenance proving extremely time-consuming, expensive and prone to human error, the operator took an innovative approach to resolving the issue. Given the large number of asset variables, it was impossible to accurately predict when a component might fail. However, by consolidating and analysing data generated from sensors throughout its network, the operator can now predict more failures in advance, and give officials the ability to plan maintenance jobs based on condition of the asset and not time. As a result they are now on track to meet that reduction in operating expenditure – savings that will ultimately be passed on to the consumer.
This predictive data analytics capability was also used by a nationwide car insurer – which re-imagined its entire industry to offer personalised premiums based on individual driving behaviours. Using an on-board telematics device that captures data on driving habits, it analysed driver data and set individual premiums based on how safely each customer drives.
Another example is that of a regional police force, which leveraged advanced analytics technology to reduce crime rates to their lowest levels in a decade. Analytics allowed officers to share and extract intelligence from critical police data, from which they can now identify incident patterns, forecast crime “hot spots”, and allocate resources accordingly to reduce crime rates.
These examples demonstrate just some of the opportunities presented by data and analytics. But this is just the beginning.
Ask IBM’s Watson for example, the supercomputer that competed on and won the US general-knowledge game show Jeopardy!, and which is now being put to work in a variety of industries to solve both business and societal challenges.
Watson can understand questions posed in English (and soon Spanish) natural language and this, combined with the ability to process information akin to how people think, represents a major shift in an organisation’s potential to quickly analyse, understand and respond to data. Watson’s ability to answer complex questions with speed, accuracy and confidence has the potential to transform decision making – helping healthcare professionals make faster, more accurate diagnoses; enabling banks to offer more targeted financial advice; and customer service agents to provide specific, insightful answers to customer enquiries.
When combining the power of Watson-like analytics capabilities with social, mobile and cloud, business leaders have a valuable new source of significant commercial value and competitive advantage at their fingertips.
Social – Tweet It, Pin It, Post It
Currently, about 26 percent of the global population actively uses a social network, but in Europe this figure is even higher, with 300 million people (40 percent of the population) socially active. This is profoundly impacting business relationships with consumers, an ever-increasing part of which is conducted online.
Social media is used by customers to rant and rave about service experiences and by employees to drive company innovation. It can be used to gauge public sentiment almost immediately. Every day several hundred million tweets are posted on Twitter. More than 50 million status updates are published on Facebook and roughly 40 million photos are posted on Instagram. Clearly, it is not the volume of participation on social networks that is lacking, but it takes the right kind of technology to make sense of these terabytes of data.
Again, it is analytics that businesses turn to net down this information – data insight from social media activity can be applied to everything from sales strategies to pricing structures, and is, crucially, in near real-time. It’s the ultimate market research panel: transport operators can use social media to uncover traffic trends; film studios can use it to project box office takings; and retailers can use it to identify merchandising trends.
One online fashion retailer recently discovered the power of analytics by using it to better understand how its customers perceive promotions, products and brands. The outcome? A revenue increase of almost 15 percent in less than a year. By analysing tweets and Facebook comments to gauge responses to each sale, it used the insights gathered to determine which brands to stock, which sales channels to use, and how to increase sales from existing customers.
Mobile – The Era of the Individual
This online social world would be unimaginable without mobile, and it is just one of the many ways our behaviour has been transformed by the digital era. Mobile has changed the way we engage with family and friends, the way we buy products, and the way we stay informed — generating billions of interactions a day, millions of times a second. We are now blasé about applications such as mobile banking, which allow you to securely connect to your account, pay bills and manage your investments, regardless of the device you are using; something that would have been unimaginable just a few years ago.
In a pre-mobile world, engagement might have happened by email, telephone or face-to-face. But today, mobile has fundamentally changed the way business is done, putting the individual at the centre of the experience. Businesses are increasingly able to personalise each customer touch-point, and deliver useful services as and when they are needed.
Mobile is not only dictating a changing buyer/seller dynamic, but it is also generating transformative possibilities for the entire enterprise. It is transforming the commercial world just as profoundly as the internet did previously, and business must anticipate and react to this changing landscape. In the past decade, we have seen slow technology adopters fail because they did not anticipate the shift to online commerce. These organisations serve as a stark example to the business leaders of today.
Forward looking marketers, technologists and supply chain managers are using mobile to run just about every business process. This includes sales support in real-time wherever they are; making payment processing simpler and more transparent; checking inventory to provide product specifications and details instantly to customers; and offering employees mobile apps that improve productivity and collaboration. Indeed, according to technology analyst firm Gartner, 25 percent of all enterprises will have their own app store by 2017.
One early adopter is a US construction company, which extended access to its data and CRM functionality to smartphones and increased sales by 40 percent in the process. With sales people and project managers spending most of their time working remotely at prospective project sites, it made absolute sense to enable remote access to business data and analytics capabilities. This enabled employees to quickly determine project feasibility, accelerated decision-making and ultimately saved approximately 400 employee hours per month, which were previously spent on manual in-office processes.
Cloud – Embracing the Phenomenon
As consumers, we’ve grown used to buying products, checking restaurant reviews, making reservations or sharing pictures — all from our smartphones. These expectations of flexibility and process simplicity are the same driving force behind cloud computing. In much the same way that changing dining tastes drive restaurant menu evolution, the way users consume computing resources is driving innovation in how they are delivered.
Cloud computing offers access to unlimited computing power and provides easier ways to process large amounts of information. It supports technologies such as mobile computing, big data analytics and those that tap into the power of social networks. The sky is (appropriately!) the limit. Combining cloud computing with mobile and analytics technologies enables businesses to prototype and validate new ideas faster, explore new services and applications, and therefore find new ways to help companies grow their business.
Cloud, Analytics, Mobile and Social: A Powerful Combination
By embracing emerging technologies, leaders can capitalise on the opportunities presented by the digital era to grow their business and enhance customer experience. This combination of technology forces (cloud, analytics, social and mobile) is motivating innovative and exciting possibilities for new products, processes and business models – and we are only at the beginning of what will no doubt be a very different marketplace for both customers and businesses.
By grabbing hold of the lifebelt offered by new technologies, business leaders can tap into the power of data and avoid being one of the Luddites who risk getting left behind in what promises to be a dynamic era for the global marketplace. Most importantly, we have every reason to be optimistic because, thanks to technology, there are more opportunities than ever for organisations, governments and societies to thrive in the digital era.
About the Author
David Stokes is the Chief Executive for IBM in the UK and Ireland (UKI), where he is leading the charge in helping organisations across all industries leverage digital technology to transform, both by streamlining their business operations and by creating engaging front office systems.
1. The exabyte is a multiple of the unit byte for digital information. One exabyte is one quintillion bytes (short scale). 1 EB = 10006 bytes = 1018 bytes.
2. http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white_paper_c11-520862.pdf; http://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf.