Regulation – a class of Big Data apps

There are bad guys out there!

 

Going back to the gist of my last post, one of the pillars that underpinned de-regulation was the idea that companies would work in a ‘correct’ manner and regulate themselves. The truth is that this worked and still does work very well for 95% of companies but there are always bad pennies committing fraud or simply not being careful in accounting practices. Thanks to a few well known financial disasters, even before the global meltdown, the concept of re-regulation loomed large across many industries. There are many sets of rules that are now in place to bring governance to company business – some of the more well known include Sarbanes-Oxley and Basel II and III which have been around for a little while now. We might ask ourselves what do they have in common and the answer is that both and many more such initiatives, demand that very accurate and accountable numbers are produced quickly from very complex underlying data – the need for Business Intelligence rears its head once again and the term ‘Big Data’ can certainly be applied to some of these initiatives.

 

Re-regulation demands that some very complex numbers are delivered:

 

  • Quickly
  • Accurately
  • Transparently

 

 

Throw into the pot that the data needed often as not comes from tens or even hundreds of operational systems distributed across the world and that some of these initiatives need very complex predictive modelling and detailed segmentation and we see a new class of Big Data applications.

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Big Data = more diverse data

 

 

Many ‘mega-trends’ are in place today – Globalisation, re-regulation, internet shopping, disengaged customers and more take-overs day by day. The need to have accurate information is paramount simply to survive let alone grow.

 

Too often we use big words without thinking about what they mean and Globalisation is one of them. Now I am not going to write about globalisation here but it is useful to consider it as a phenomenon, is it real, is it important?

 

Let’s consider some facts:

 

  • 70% of the world’s shoes come from one town in China – now if you produce shoes in the UK this fact should be very worrisome.
  • To all intents and purposes the UK no longer has a car industry – we used to have, but in the end British Leyland amongst others proved a tad slow and not too smart. There’s nothing left anymore.
  • In the space of just a few years Vodafone has penetrated nearly the entire know world with its mobile services. Unless you take active steps to prevent it, you are almost guaranteed to end up paying some money one way or another, to Vodafone this year.
  • Most holiday companies now make a sizable proportion of their revenue from banking products or shipping cargo.

 

 

Globalisation is the force behind the break-down of trading barriers but globalisation is partly a result of another massive change in business practices over the last twenty years that we call de-regulation. Basically, in the ‘old days’ there were rules about what a company (or type of company) could sell. For example, Building Societies could not lend savers money to borrowing customers directly – you had to have a banking license to do that. Retailers could not sell insurance products. Insurance companies could not provide savings accounts. This all changed in the process of de-regulation and so now retailers can sell banking products, banks can sell insurance products and by and large, anything goes. When you put the two things together, globalisation and de-regulation, we have another world, a world in which the biggest retailer ever seen – Wall-Mart can presumably sell banking services in the UK thus becoming a competitor of Barclays Bank!

 

Note: Wall-Mart own ASDA – I’m not sure if they sell banking products but I guess so.

 

So what does that mean today in terms of Big Data. Well now your average retailer knows a lot more about you than ever before. They used to know what you eat, now they know what you ware, where you go on holiday, how much you spend and get paid a month etc, etc and it’s by combining all of this information that a 360 degree of a consumer can be constructed. By trawling social media feeds they can find who your friends and family are and what you are saying about their products………scary!!

Natural Selection in Business – Does using Big Data provide a sustainable advantage?

 

In nature, when resources are plentiful, species live together quite amicably. Even predator and prey reach a satisfactory balance whereby there is always food for both. However, when resources are scarce, species that were once happy together often turn into bitter enemies. The strong, big guy’s fight each other, determined to completely obliterate their competitor often resulting in mortal damage being inflicted on both. Whilst this is happening, the intelligent guys, who are inevitably smaller and physically weaker, get to work. Firstly, they take advantage of the preoccupation of the others by amassing their basic requirements quickly. They then diversify and find a niche for themselves, knowing that competition will come, but being determined to foresee it and avoid it where possible.

 

Most people accept that this is the way of the natural world and business dynamics tend to follow the same basic rules. Intelligent companies will not measure themselves by numbers of employees, amount of real estate or revenue alone, but will instead increasingly judge themselves on different values:

 

  • The average life time value of their key customers
  • The elapsed time for a new customer to become profitable
  • Public image
  • Customer retention
  • Knowledge, expertise and willingness of the work force
  • Brand awareness and flexibility
  • Environmental friendliness
  • Efficient and focused work practices
  • Customer satisfaction

 

Note: be aware that the little guys don’t always have to take on the big guys directly and in fact it’s usually best not too. Those of you who know the story about David and Goliath should be clear that this was not a simple big guy versus little guy competition in which David shows the world not to be afraid of a ‘larger’ opponent. The fact is that Goliath, although being big, had no noticeable weaponry whilst David however, had the equivalent in those days, of a sawn off shotgun. My guess is that if the two guys had met with equal weapons the result would have been rather less romantic but David showed some real common-sense here. He knew that if he wasn’t prepared for the fight he had no chance so he fought the battle very much on his own terms.