Here’s a sobering thought: Since 2000, 52 per cent of Fortune 500 firms have disappeared, according to Constellation Research. They’ve merged, been acquired, declared bankruptcy or just fallen off the list.
Why? Because of big data and the creation of new business models, says Ray Wang, principal analyst and founder of Constellation Research, who spoke during a recent webcast on “Who’s afraid of the big (data) bad wolf?”
And if 20 per cent of your revenue is not an “insight stream” by 2020, he says you’re probably not going to be in business at that point.
Digital disruption is more than just a technology shift, says Wang. New business models are being built on big data. A product company, for example, gives away their product in favour of service revenues. Or a service-based business sells “experiences” at varying price points and service levels.
Take Uber, for example — a company that allows you to hail a taxi, private car or rideshare with one touch on your mobile phone. The app uses your phone’s GPS to detect your location (even if you don’t know your exact address) and connects you with the nearest available driver.
You can track the vehicle’s progress on your phone and the app texts you when your ride arrives. The fare is automatically charged to your credit card on file (you can even split the bill with friends) and a receipt is emailed to you. Not only that, but you can rate the driver and leave comments.
Behind the scenes, the app takes advantage of the cloud and
big data to find the nearest ride, and essentially turns a service-based business into one that offers an “experience.” So, you can get a ride that matches your style and budget; uberX, for example, offers everyday cars that are “better, faster and cheaper than a taxi,” while UberLUX offers “the finest cars with prices to match.”
I’m sure taxi drivers don’t sit around worrying about how big data is going to disrupt their business model — but they’re taking notice of new competitors like Uber and SheTaxis (which is similar to Uber, but only employs female drivers and only accepts female passengers).
Big data is fuelling these new business models. But, “don’t let your data lake turn into a data swamp,” says Wang. Map out your information flows. Focus on data quality to avoid false positives and negatives. And don’t underestimate the importance of data governance.
We’re already seeing the emergence of “information brokerage,” where companies sell raw information, provide benchmarking services and deliver analysis. Wang believes we’ll see more of this, particularly with unstructured data sources such as social media and chat streams.
These new disruptive business models need data, but they also need seamless integration between systems and networks, both internal and external. And integration will be the key to making this all work. Otherwise your data lake could turn into a data swamp.
The goal of big data, as it’s always been, is to improve insight to make better decisions. That means integrating the forces of mobile, social, cloud and UC. You don’t need to be afraid of the big (data) bad wolf — but you need to embrace it.