How companies like Nike and Rent The Runway are leaders in using data to transform their business model in the application economy
David Hodgson, November 25, 2014
Underneath the varied landscape of the application economy the new raw material is data, and learning to mine and craft is the key to success.
So what is this data and how can you transform your business?
Structured versus unstructured data
You often hear statements like 70 percent of business data is on the mainframe, or 80 percent of business data is structured data and only 20 percent is unstructured. These statements might be true, but they can mask what’s important for you to know.
Some analysts estimate that 80 percent of a company’s data is unstructured and 20 percent is structured. The apparent disconnect here with the previous statements is explained by the word “business.” The fact is that most companies today have a ton of data, but they are only deriving business value from a small part of it and that part is predominantly structured data.
Deriving value from unstructured data
The companies that are differentiating themselves as we enter the application economy era are those that have learned to derive business value from unstructured data. This has been achieved largely by use of new analytical tools like Hadoop or also by combining analysis of unstructured data with their structured data in platforms such as Oracle, Teradata and DB2.
These might be established companies re-enforcing their existing business models by using analytics and unstructured data to improve their operations. For example, banks can detect fraudulent activity from logs, geospatial data and buying pattern analysis. Another example could be a car company monitoring Twitter activity for a sentiment analysis around a new car model to predict potential recalls.
Other established companies such as Nike have re-imagined their business model by aligning their sportswear to initiatives like health monitoring and data collection and analysis around the concepts known as the quantified self, biometric data and activity logging. Nike consumer technology officer Chris Satchell, who spoke on a panel hosted by CA EVP Amit Chatterjee on day two of CA World’14, said the company got into “wearables” not because it wanted to be in consumer devices, but because it wanted to be closer to its athletes.
And of course disruptive companies like Twitter, Rent The Runway and Kaggle thrive on generating and using data to create new business models that threaten the incumbents. CEO and co-founder of Rent The Runway Jennifer Hyman, who spoke on CA CEO Mike Gregoire’s panel on day one of the show, said: “The customer is willing to give out huge amounts of data if you give her something worthwhile for it.”
Discover “free” business value
There are several sorts of unstructured data that you could turn into valuable business data with the right collection and analysis techniques. This could be “free” business value hiding right under your nose:
Data you might already have in your organization’s assets:
Log data of various sorts, examples every company has are systems logs of user activity, system events and errors and comments in service desk tickets or customer surveys.
Raw machine data from infrastructure like point of sale networks. Usually a subset of transaction data is loaded into formal databases but the other data items such as teller id might be useful data for analysis.
Data from devices comprising the Internet of Things devices. This data source is still emerging and growing and the bulk of it will be outside your organization but today you might use RFID tracking, you might allow people to bring their own devices or you might have sensors in devices in a manufacturing facility. Collecting data from any of these sources could derive new business value if you set some data scientists on to it!
Data you could add to you unstructured databases for almost zero cost:
Social Data from Linked In, Facebook, Twitter (or your own facility like Salesforce Chatter) might be a rich source of market trend or sentiment data.
Public Data from websites with APIs might be anything from weather reports, traffic data or government statistics. Then there is the textual data that could be mined from sources such as public financial listings and earnings reports.
Where are you at with discovering what data you have and what new data you could collect? What percentage of your business data is unstructured?
The answers to these questions could well be a leading indicator of your success in the application economy. I’d love to hear your thoughts either in the comments section below or connect with me on Twitter as @dmgh7