Are Small Businesses Priced Out of Big Data?

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ADOTAS — You can hardly pick up a trade magazine, read a newspaper or listen to public radio without hearing about Big Data.  The reason is straightforward:  Many large organizations’ investment in big data technologies and skills are beginning to bear fruit. But what about small and medium-sized businesses (SMBs)?  Is big data out of reach for them?  SMBs need to consider entering the big data arena so here are a few suggested ways in which big data solutions can actually be quite affordable.

What’s Big Data’s Value to Marketing Organizations?

Marketing groups within larger enterprises have been busy integrating big data into their overall strategy to create a competitive edge for years. They’re using big data to identify the correlation between customer wants, preferences and loyalty so that a richer experience can be provided and maintained.  Just as importantly, they are using insights gained from big data analytics to maximize spend across the right touch points or channels.

These organizations have learned that the key to capturing the attention of their customers and their prospects is to customize their experience so that it’s both pertinent and pleasant, whether they’re in the store, interacting through the web or driving in their car.

They’re doing this by harnessing and integrating new types of information to create messages tailored to a person’s wants and desires — at a specific point in time. For example, by tying smartphone GPS signals to a store’s location to what a potential customer is in the market for (as expressed in Google searches or tweets), retailers can send coupons and suggestions that are not only highly relevant but welcome by the recipient. Striking the balance between permission based data acquisition and giving back value to the customer from a brand perspective will be critical in creating a symbiotic relationship.

For years, marketing’s goal has been to catch the right customer at precisely the right moment at the right location with the hope that they would actually make a purchase; in other words, apply the fundamental rules for identifying and capturing the attention of their target market.  The traditional approach required significant investments in mass-media buy such as TV, radio and print ads. An analysis of the brand’s current customer database enriched with Big Data sets allows the marketer a finer lens to be applied in identifying who should receive a direct mail piece versus an email.

Once customer preferences have been established, marketers can collect and analyze digitized response data to continuously optimize channel contact preferences. Combining traditional data such as demographics, household income, category influencers with big data such as tweets, site behavior, and click-through rates gives the CMO a more complete picture of campaign effectiveness and can use the results to alter marketing spend choices.

What about affordability?

Traditional SMBs who want to leverage big data sets to increase their customer reach, create new insights, develop predictive models, or analyze data in motion (streaming analytics) may find that the cloud is the solution to their problem, at least initially.  For example, SMBs need to target their marketing investment more efficiently than larger enterprises.  Leveraging big data and applying scientific analytic techniques to predict how people will behave when presented with a choice or question can provide a higher yield on an organization’s marketing dollars.

Fortunately, Hadoop, the technology that underpins most big data solutions, provides SMBs with the opportunity to start small and scale incrementally, as demand increases.  This means a brand can start with a nominal investment in hardware and open-source tools or leverage the cloud to begin its big data journey or simply to vet out new ideas and hypotheses.  Many of the cloud providers offer capacity on demand, allowing companies to create an environment for a specified period of time to either satisfy a one-time need or to prove out the viability of big data.

What about skills?

Given the above, there are affordable hardware/software options for SMBs wishing to enter the big data area.  But what about the human capital needed to leverage the solution?  Again, several options exist including hiring, training or partnering with a big data vendor or consulting firm.

Hiring as a first step may not be viable for a couple of reasons. After conducting a proof of concept (POC) or limited trial, an SMB could easily conclude that big data doesn’t provide either the desired outcomes or the expected return on investment (ROI), turning the newly hired resource into unnecessary overhead.  Perhaps more importantly, big data talent is still hard to come by, and those with the right skills are commanding top dollar, potentially putting them out of reach to SMBs with limited budgets.  While this will change as more people learn the required skills, higher salaries are a reality of today.

While training might be an option, the learning curve is still very steep with many developers struggling to learn, let alone master, the programming and environmental aspects of Hadoop.  This leads interested organizations to a third option – partnering with a Big Data vendor, a cloud provider, a consulting firm, or even a local university.  Either pairing recently trained staff with a skilled partner or simply allowing the partner to drive a POC may provide the economic trade-off that puts big data into the realm of affordability for exploration and/or initial deployment.

SMBs interested in big data but struggling with limited capital and skills should do the following:

  • Make sure that a valid business need exists with an ROI that is both provable and achievable.
  • Do the homework to identify two to three Big Data technology providers that warrant a closer look.
  • Compare and contrast the costs of cloud versus on-premise solutions, keeping in mind that the economics will change as the solution begins to scale.
  • Find out whether the technology providers offer a cloud solution (not all do).
  • Ask the solution providers for a list of partners as not all of them offer implementation services.
  • Work with the selected partners to validate the use cases, prove the ROI, and team with internal resources for training and knowledge transfer.

The use of Big Data is steadily growing and is rapidly moving beyond the hype-cycle to ever-increasing levels of adoption.   There is no doubt that this approach is here to stay as it is truly helping to drive new insights, increase campaign effectiveness and to create a more intimate customer experience. Marketing groups wishing to stay competitive, maintain brand loyalty and have high growth aspirations can no longer relegate Big Data as a ‘nice-to-have’ capability. By starting small, leveraging cloud offerings and partnering with solution providers, SMBs’ marketing groups can begin to reap the same benefits as their larger brethren while holding costs in check.

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