Big Data/Predictive Analytics Study Results
The goal of this report is to explore executive perceptions and opinions about real time data applications and operations. We have interviewed over forty (40) Key Innovation Leaders who have been cited as the most innovative thinkers within the world of analytics and have documented distinctive case studies which have clearly optimized business intelligence.
With every passing day, the pace of business is accelerating. Paradigm shifts in the global economy combined with rapid technology adoption are forcing business executives to contend with a new global marketplace fraught with uncertainty and constant change. To be successful under these new market dynamics, firms must adjust operational processes, corporate strategies and business models at lightning speed-allowing them to leverage intelligence instantly and take immediate action. At the same time, they must make sure their decisions are informed by proper data and analysis.
The interviews and research conducted focused on large and medium-sized business units in four sectors of the economy-consumer products, technology, oil and gas, and retailing.
The data revealed some interesting findings:
Executives realize they need to take their businesses into real time. In fact, 30% of firms already derive considerable benefit from real-time business, and nearly two-thirds of companies yet to implement real-time business techniques plan to do so over the next five years. With at least one-fifth of companies in every sector or region using real-time business techniques, its value to businesses of all types is growing. For the majority of the businesses that are behind these leaders, the imperative is to make up lost ground.
There are some surprising leaders-and laggards. The majority of oil and gas firms have implemented a real-time business approach, particularly as part of their production processes and financial and business risk management strategies. This indicates the importance of real-time operations particularly for complex, capital-intensive firms. Consumer product and retailing firms, meanwhile, lag in terms of implementation. Retailers in particular are behind in the implementation of real-time operations for customer experience and supply-chain management, two critical areas for retailing success. Retailers also report their efforts around real-time business to be less effective than firms in other industries.
Early adopters have seen substantial results. The main strategic goals of executives choosing to implement real-time business techniques are to increase market share and enhance service and quality advantages. Operationally, real-time business is proving especially effective in delivering improvements in customer experience, production processes and supply chain management. But perhaps most striking is the tangible return on investment: Those able to estimate put revenues gains at over 20%, and cost reduction at nearly 20%. In fact, future gains are expected to exceed earlier ones, with revenue increases of 28%.
But challenges are significant, in a number of areas. Respondents cite a lack of technology as a main obstacle, as well as suppliers' unfamiliarity with real- time systems and a lack of internal expertise. Indeed, the move to real-time operations can be extremely complex, and will require careful planning and strategy to ensure success.
Those planning to roll out real-time systems have different strategies than early adopters. They will put particular focus on financial and business risk, production processes and supply-chain management. Meanwhile, almost all early adopters plan to carry on investing, though they will shift their focus from sales and marketing towards product design and innovation, while continuing to focus on customer experience.
The need for speed
We live in a world that increasingly communicates and operates in real time. Over the past decade, the spread of social media and mobile phone use, combined with the explosion of accessible information and increasing interconnectedness of global markets and cultures, has dramatically sped the pace of our daily lives. The evidence is clear in the dissemination of international news: For example, when US Airways Flight 1549 emergency-landed on New York's Hudson River after striking a flock of geese during takeoff in January 2009, it took only three minutes for the first "tweet" to alert the world
The pace of business, too, has dramatically accelerated. Customers and clients expect their queries and problems to be addressed immediately. In an uncertain global market where there are many more competitors and constant change, executives know that success depends on the ability to take fast action and make rapid decisions. Indeed, in the business world today, speed is not only expected, but required. As Rupert Murdoch noted: "The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow."
But are companies prepared to take their firms into real time?
While nearly all respondents agree that doing so is critical, only one-third of businesses have already implemented real-time business applications in some way (though 65% of those who have not yet implemented real-time systems expect to do so within five years). And the experience is far from uniform. For example, companies that focus on business-to-business operations (35%), are more likely to have moved to real-time than those in the business-to consumer space (16%). And almost half of the very large businesses studied- those with annual revenues in excess of US$25 billion-have introduced real-time business, significantly more than those with a turnover of less than US$1 billion (22%) or between US$1 billion and US$10 billion (28%).
Adopting a real-time business approach can provide companies with myriad benefits at both the operational and management levels
At an operational level : by speeding up data capture and simplifying processes, executives can reduce inventories, minimize business risks, lower operational costs, accelerate speed to market, foster productivity and better meet customer needs.
At the management level, by accelerating decision-making and planning, executives can exploit market opportunities faster, identify competitive threats sooner, cope with market shifts more quickly and transform stagnating businesses.
With the internet transforming business, mobility moving to center stage and on-demand computing becoming the norm, global firms are on the threshold of an era that will radically transform operations. Companies need to consider how to adopt real-time into the fabric of their firms, or risk falling behind their competitors.
What does it mean to be a "real-time business"?
For purposes of our research, "real-time business" refers to processes that allow companies to conduct a range of business activities instantaneously. The activities that make up realtime business can, therefore, incorporate all aspects of business, including gathering and acting on business intelligence, developing promotional and marketing tactics, controlling and adjusting production processes, managing inventory, identifying and managing business risks, closing and fulfilling sales and meeting customer needs.
Real-time operations depend on in-memory analytics, which takes a different approach than traditional business intelligence systems. Rather than storing information on various external disks and caching bits of data in a computer's random access memory (RAM), real-time intelligence puts the data directly into RAM. Advancements in computing power and storage have made it possible to store vastly more amounts of data in RAM than ever before, and allows for extremely fast query responses
Which companies are ahead of the curve in adopting real-time operations? The answers are surprising. According to respondents in the four industries surveyed, oil and gas firms (54%) take the lead, particularly in production processes and assessing financial and business risk.
In sharp contrast, only 20% of consumer products and 29% of retailers have moved toward real- time operations.