BIG DATA. for Small and Medium Businesses
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1 BIG DATA for Small and Medium Businesses
2 CHAPTER 1 THE FEAR OF BIG DATA MISCONCEPTIONS OF BIG DATA Small and medium business owners have long felt the sting of not having the resources that big businesses have, but many haven t felt the need to invest in the kind of analytics that can handle Big Data. Many believe that Big Data is just for Big Business, and some even have a fear of the large amounts of information that could be gathered. There is a misconception that small business owners would not know what to do with that kind of data, and money would be lost scrambling to make use of large amounts of customer information. Unfortunately, City National Bank reports, such fears and misperceptions could be costing many small and mid-sized businesses a tremendous opportunity to improve operations, boost efficiency, reduce costs, streamline supply chain management, and increase sales and revenue. THE SMALL COST FOR BIG DATA Historically, small businesses have considered Big Data prohibitively expensive. Small businesses rarely have the kind of capital that large businesses have, and most of that goes into merchandise, production, and employee paychecks. If small business owners could find the money to fund Big Data analytics, however, the data collected would inevitably increase opportunities for owners to develop better business strategies. The trend as of late has been toward a drop in technology costs and an increase in new tools developed for business analytics to gather data. Kevin Kelleher of Inc.com had this to say about the cost of Big Data: Now, thanks to falling tech costs and new tools that display complex databases in ways even technophobes could love, smaller companies could unlock many more secrets from data. RESISTING ANALYTICS With the systematic merging of analytics with Big Data, businesses are finding an increase in accountability creep. At its core, this means that, as data is analyzed for weaknesses, more employees, from basic entry level all the way up to executives, are being held more accountable than ever before. For some, this has been an unintended and unwanted side effect of Big Data. Instead of focusing on ineffective business practices that could be reworked to be more inexpensive or more productive, analytics can point the finger at individual employees, or even departments, not performing up to standard. This can lead to an unfortunate scenario in which employees are cut, rather than retrained, and people finding that their job security is anything but. The natural result is for employees to be suspicious of data analytics, when, if used properly, much could be gained from embracing the technology. SMALL BUSINESSES RARELY HAVE THE KIND OF CAPITAL THAT LARGE BUSINESSES HAVE, AND MOST OF THAT GOES INTO MERCHANDISE, PRODUCTION, AND EMPLOYEE PAYCHECKS, NOT TECHNOLOGY. 2
3 CHAPTER 2 DATA GOING UNNOTICED DATA AWARENESS Big Data can be difficult and confusing for small and mid-sized business owners to capture and understand. A big part of what makes the gathering of data useful is the ability to use it once it has been sorted and codified. But for the small or midsized business owner who lacks analytics training, or believes that there is little insight to be gained, collecting data hardly seems worth the investment. Much of that data is fleeting and fairly useless, says Forbes Mike Montgomery. But more and more of that data can be mined for useful information and patterns. IDC says that right now, about 22% of data is useful. By 2020 that number will climb to 37%. What does that mean for small and medium-sized businesses? Big Data affects them in more ways than are ever before. If small businesses want to compete with corporations, they must learn to use the same kinds of tools that make Big Business so effective. Dave Kerpen, CEO of Likeable Local, asserts that, [S]ome business owners overlook this key tool, and miss out on an opportunity to better understand what they re doing well, and not so well. Small and mid-sized businesses in nearly all industries can successfully employ Big Data to grow their customer base, improve customer relations, and increase revenue. All they need are the right tools and a little research into how analytics can work for them. 3
4 WHY DOES IT MATTER? Some of the greatest minds in the world have repeated the same adage: Knowledge is power. In today s world, this can be translated to the idea that the more information one has, the more power one is sure to attain, if only one knows how to use it. Over the years, countless business decisions have been made on the advice of gut feelings. How effective those feelings have been, however, is at best neutral. The idea, of course, behind all of this, Dave Kerpen says of analytics, and the reason it matters to a small business, is that with more information, we can make better decisions about how we spend our money. And we can use this data to help us sell more, and hopefully, make more money. 4
5 CHAPTER 3 UNDERSTANDING THE DATA SURROUNDING YOUR BUSINESS MAKING SENSE OF BIG DATA More affordable, readily available technology is at the forefront of the Big Data boom for small and mid-sized businesses. A small business owner who invests in cloud-based data analytics services can expect to make back their investment in as little as a few years. Some have even found that they made back their money, and more, in as little as one year. Tools for data gathering and analysis are plentiful. Talend, a data management software company, offers such services as cloud computing and application integration by harnessing the power of Apache Hadoop code and NoSQL databases with an easy-to-use graphical user interface. Progress Software combines cloud service with applications like Excel, Marketo, Oracle, and SQL Server so that small business owners can focus less on integration and more on using the data they gather. With the use of Big Data, small and medium-sized businesses are, according to Kevin Kelleher, cross-referencing their internal information - pricing histories, customer traffic patterns - with multiple outside sources to increase revenue by understanding customers behavior better, reducing costs by eliminating inefficiencies and human bias, strengthening client bonds by anticipating clients needs, enriching service offerings with new knowledge, and giving employees new tools to perform their jobs better. 5
6 CHAPTER 4 THE ADVANTAGE OF SMALL BUSINESSES FLEXIBILITY AND AGILITY Small businesses have the flexibility of a smaller task force to retrain, and can therefore change the way they do things more quickly once they learn how to use the data that analytics collects. After gaining access to customer information, such as buying habits and loyalty-card data, many small businesses are quick to adapt to the new information in order to better serve customers. Ashley Stirrup, Chief Marketing Officer of Talend (a data management software company), related a bit of advice she received from a client: If you can t act on the information in real time, all you know is how much money you are losing. Using the data gained in a fast, efficient manner is one reason that Big Data outshines the old spreadsheet system that many small and mid-sized businesses have employed in the past. Large corporations are much less agile in their ability to quickly change models in response to new information, and therefore less suited to take advantage of some of the benefits Big Data has to offer. Small businesses have the advantage of agility, making them perfectly suited to act on data-derived insights with speed and efficiency, says Bernard Marr of Business Standard. Instead of relying on past experience, gut feelings, or simply reacting to the actions of competitors, small businesses with Big Data can be quick to adopt new approaches to drive innovation. 6
7 CHAPTER 5 THE FRUITS OF BIG DATA THE BIG OPPORTUNITIES As the world moves into a more data-driven economy, small businesses will find it much easier to work with data. The December 2012 Intuit 2020 Report states that, The opportunities being created by the power of data and analytics are not limited to tech startups. Small and mid-sized business owners in all fields who learn to use the multitude of new, cloudbased data gathering and quantifying tools will find more opportunity for growth. The Intuit 2020 report further expands on the theme, and insists that, By 2020, data will be a key driver of economic growth, [...] with data and information becoming important components of many goods and services. Businesses that tap into the potential of analytics can expect to develop better business solutions, cut costs, streamline operations, and create new, value-added services that are able to compete with Big Business. 7
8 THE BIG BENEFITS Big Data cuts costs for both small and large businesses. Small business owners are empowered when they gain the ability to study trends in gains and losses. Eliminating errors in invoicing, delays in product shipment time, and overstaffing during non-peak hours are just some of the ways that analytics can enable owners to play the numbers to reap the most benefits. In the same way that Big Data helps cut costs, it also helps to increase efficiency. The right data presented in the right format opens up a world of possibilities for small businesses. Small and mid-sized businesses are especially vulnerable to money siphons, because they don t have the deep pockets and resources of a corporation. But the kinds of tools now available to small business owners can identify areas in which resources are not being used optimally. There are some things the human eye is not trained to spot, and identifying subtle patterns in sales can be like looking for a needle in a haystack. With the help of the right tools for analyzing Big Data, however, small businesses can identify trends that would otherwise go unnoticed. Big Data effectively enhances the decision-making process, and takes some of the strain off of small businesses to see through the statistics to make the sale. Small and medium-sized businesses can often feel dwarfed by Big Business, because limited funds and limited access to information make it harder for small business owners to compete. However, recent innovations have made data analytics affordable and easy-to-use, and with the agile nature of small businesses, Big Data is the key to competition in the global market. 8
9 WORKS CITED Angeles, Sara. 5 Ways POS Systems are Changing (and Why it Matters). BusinessNewsDaily.com. Business News Daily. 29 May Web. 26 Aug Baldwin, Howard. Does Big Data Have a Place in Small Business? Forbes.com. Forbes Magazine, 1 June Web. 26 Aug Chen, Hsinchun, et al. Business Intelligence and Analytics: From Big Data to Big Impact. MIS Quarterly Special Issue. Dec Web. 26 Aug Donnelly, Christina, Geoff Simmons. Small Businesses Need Big Data, Too. HBR.org. Harvard Business Review. 5 Dec Web. 26 Aug Gannett, Allen. Beyond the Point of Sale: These are the Top Tech Trends in Small Business. TheNextWeb.com, The Next Web Insider. 4 Oct Web. 26 Aug Kelleher, Kevin. What 3 Small Businesses Learned from Big Data. Inc.com. Inc. July Web. 26 Aug Marr, Bernard. Big Data for Small Businesses. Business-Standard.com. Business Standard. 4 May Web. 26 Aug Montgomery, Mike. Small Businesses Shouldn t Fear Big Data. Forbes.com. Forbes Magazine, 7 May Web. 26 Aug Nisen, Max. People Fear Workplace Data Because They Don t Want to be Held Accountable. BusinessInsider.com. Business Insider. 4 Feb Web. 26 Aug Schrage, Michael. The Real Reason Organizations Resist Analytics. HBR.org. Harvard Business Review. 29 January Web. 26 Aug Troester, Mark. Small Business, Big Data. SAS. com. SAS. Web. 26 Aug Tully, Keith. 3 Ways Big Data Impacts Small Business. SmartDataCollective.com. 11 May Web. 26 Aug Kerpen, Dave. How Small Businesses Can Make Better Decisions with Big Data. Inc.com. Inc. 7 Apr Web. 26 Aug
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