What can Big Data do for your business?
Even small businesses can use big data. And they have partners to help them make the most of it.
“There’s so much data. It’s the utilization of it that’s the challenge,” says Ayman El Tarabishy, professor at the department of management at George Washington University in Washington and executive director of the International Council for Small Business. “We’re moving from data to information to knowledge that can be acted on.”
Small businesses lag larger ones in making the most of big data, digital tools and analytics. In a survey of nearly 4,000 small and midsize business executives in 14 countries by IDC, larger and faster-growing companies use more applications, but overall use of software resources is rising. The number of solutions in use rose to an average of 4.8 in 2017 from 3.8 a year earlier.
“There’s an absolute chasm between the information and data that’s available and the willingness and ability of organizations to use it,” says Andrew Fearne, professor of value-chain management at the University of East Anglia in Norwich, U.K.
“If you’re a small business owner, you’re very passionate about what you do,” he says. “It’s very production oriented. You enjoy the creativity side. If you get information that says your performance is down compared with your competitors, it doesn’t sit well.”
Because many small businesses offer niche products, they have an even greater need for granular data about their target market, compared with big companies targeting a mass market, he notes.
“Small firms often rely on intuition and networks to make sense of markets,” says Geoff Simmons, professor of management at Queen’s University, Belfast. “Big data is hard for small firms to understand because they typically don’t have data scientists.”
However, just as apps have made all manner of things as easy as a click or tap, plenty of software providers have seized the opportunity to create easy-to-use data analytics for small businesses. In addition, self-service opportunities, such as looking at top Internet queries or Web traffic, are easy for small firms to use to gain shopping insights, benchmarks against their competition or industry, and more. Some crowdsourcing sites offer data-crunching services.
“Packages are coming to where small firms can very affordably access analytics tools,” Prof. Simmons says.
Even big makers of enterprise resource planning (ERP) software are offering versions for small businesses, says Ricard Puigferrat, founder of Back to Basics Management and a co-author with Eric Weber and Carme Coll of the IESE business school’s Back to Basics Business Barometer analysis of 1.2 million Spanish companies from 2007 to 2014.
However, IESE research shows that businesses big and small best use ERP when they stick to the standard package, he cautions. They can customize—to choose which data sets are relevant—but they court trouble if they tailor the software, that is, they change lines of code in the programs.
A company that moves away from the original software “can have the premium technology but maybe it’s impossible to get the basic KPIs [key performance indicators] it needs,” Mr. Puigferrat says.
"There’s an absolute chasm between the information and data that’s available and the willingness and ability of organizations to use it"
Small businesses also can turn to partners, such as banks, insurers, credit card companies and big retailers that collect, aggregate and analyze data.
For example, Banco Santander launched “Mi Comercio,” a big-data tool in a simple app that allows businesses to glean information about consumer habits of their own customers as well as those of the competition. The program provides big-data analysis of aggregated, anonymous point-of-sale information. Clients can see such metrics as customers’ loyalty, age, social profile or income level. Businesses also can see billing, transactions or average consumption data, such as the time of day when most customers buy, or whether they are attracting more customers than their competitors.
Prof. Simmons works with a large retailer supported by a government agency to provide small firms with access to costly consumer intelligence that can transform their business.
"If you marry that to big data, you have a real chance to make a difference for small firms"
Universities also can help small businesses make sense of big data. “If you haven’t got time or don’t understand the technology, you can send an email to your local university,” Prof. Fearne says. “We have students who want to understand how things work in the real world who can take it on.”
Free databases also can be a trove of information. The World Bank, International Finance Corp., government small business administrations and census bureaus are some resources. Many businesses sell via internet platforms and social media sites, which offer analytics.
“Businesses need to ask, ‘Who are the people who want my product and where are they?’ Prof. Fearne says. By collecting data about the postal code of each store and attaching it to census data, a company can get a better geographic and demographic idea of who lives around the best stores and why the other stores are doing so poorly.
“Small firms have an advantage over big firms in that they’re more flexible and can move quickly,” Prof. Simmons says. “If you marry that to big data, you have a real chance to make a difference for small firms.”
By Catherine Bolgar