Session 6: Big Data Case Study Questions 1. In each of the examples cited above, what drove the need to collect and analyze data? Organization Amazon.com Wal-Mart Brose Partners Healthcare Facebook prepared by rmk 041814 Drivers for Data Collection and Analysis •. • •. • • • • .add more rows as needed •. • •. • • • • .add more rows as needed •. • • •. • • •. • add more rows as needed •. • • •. • • •. • add more rows as needed •. • •. • •. • • • add more rows as needed Page 1 Session 6: Big Data Case Study Questions 2. What are the benefits and what are the risks in any “big data” undertaking? Benefits of Big Data Applications Risks in Employing Big Data Applications add more rows as needed…. 3. What tools and skills are required to affect the positive leveraging of data within the enterprise? • tools: o . o o o o . o o add more lines as needed…. • skills: o o o o o o add more lines as needed…. 4. Can you think of another circumstance where big data plays a role? • • • • • • • • . . . add more liens as needed… prepared by rmk 041814 Page 2 Session 6: Big Data Case Studies Introduction: Open a newspaper or a business magazine, or go to your favorite news media web site and you will find mention of “Big Data.” The term has become all the rage. It refers to the focus of organizations of all types and descriptions on collecting and analyzing vast reservoirs of data to inform business practices, day-to-day work processes, and corporate strategy. The use of data to manage organizations and to abet competitive advantage is not a new idea but because we now have the means to collect much more data at the transactional level and because we have become savvier as data consumers, bringing data to bear has become a major focus for business leaders. Indeed, in a survey conducted of 111 major employers of Northeastern University undergraduate business students, the foremost quality sought after in new hirers – regardless of industry or role within the organization - is skill in data management and analysis. For example, when asked about the necessary skill set given his business unit’s role, the V.P. of Sales at Gillette said, “it’s all about data!” Big Data Examples: Amazon.com The folks at Amazon are data zealots. They capture data about everything done on their Web sites and in their fulfillment centers. They use this data to market to the customer, to identify and correct process problems in their supply chain, to train and incentivize their employees and to negotiate deals and improve relations with their suppliers. For example, Amazon gathers as much information as they can about each customer so as to establish demographic cohort profiles. They also collect information on what customers buy and which Web pages they visit. They use all of this data to inform the personalization engine that both suggests products to the customer each time he/she visits the web site and issues e-mails to the customer promoting specific products. These are not random suggestions or bulk mailings. Each offering is customized to the individual consumer and his/her purchasing interests. Big data enables web site personalization which in turn has revolutionized the way products and services are now marketed to consumers. Wal-Mart Like Amazon, Wal-Mart is another organization that takes full advantage of data-driven knowledge of the business. At an operational level, the company opens up its supply chain management systems so that its suppliers can follow the consumption of their products on Wal-Mart shelves. These suppliers are then charged by Wal-Mart with ensuring the just-in-time restocked of Walmart shelves with fresh product. This arrangement streamlines the procurement and warehousing processes at Wal-Mart and reduces overall supply-chain management costs. But it is also a win for the suppliers who ensure that Wal-Mart stores never run out of their products, and if well managed on their end, may also ensure better positioning and shelf space in Wal-Mart locations. In terms of supply relationship management, Wal-Mart crunches its point of sales data to provide its suppliers with a detail analysis of sales trends of prepared by rmk 041814 Page 1 Session 6: Big Data Case Studies their products, by time of year, by store location and region, and when possible by customer type. This information is gold to suppliers who use this information to forecast product demand and to optimize factory production. In return, Wal-Mart expects and gets very competitive pricing from suppliers so as to achieve its goal of being the world’s largest, low cost retailer. Brose Brose Automotive Corporation is an organization we will study in depth later in this course. In brief, they are one of the largest providers of automobile parts to the automotive industry. As of 2013, they ran 45 factories in 25 different countries and managed the procurement of raw materials, the manufacturing, and the distribution of finished goods on a global scale. Big data enables Brose to optimize its operations worldwide. For example, the procurement function for raw materials monitors the total Brose sales pipeline, including: contracts being fulfilled currently, contracts signed and waiting for fulfillment, contracts in negotiations, and contracts in discussion. From these agreements, Procurement gleans what materials are required at what factories at what point in the future. Raw materials needs must be modeled for two years out or more and these forecasts must be accurate. Procurement must then assess when to enter the market to acquire or secure for future acquisition the raw materials required to fill customer orders. Bear in mind that at Brose, these commitments are made one to one-andone-half years in advance for product that must be delivered to Brose’s customers at precise times in their respective car production cycles. This is a just-in-time process with big penalties if there is a miscalculation or a delay. Without lots of historical, current and projected sales and production data, and the ability to analyze and put this data to work, Brose would not be in business today. Partners Healthcare Like Brose, Partners is another case we will read and discuss later in this course. Partners is the leading healthcare provider in Massachusetts with well over six million patients in care and the Commonwealth’s largest employer. Partners maintains huge, complex bodies of information about each patient in the system. This data is essential in providing each patient with the quality, personalized attention that they require. Taken as a whole, this vast body of medical data also serves a higher-level, strategic purpose. By analyzing patterns of results from medical treatments against the personal histories (at times down to the DNA level) of patients, Partners researchers can determine which therapies are most effective for which groupings of patients. Through this deep analysis of the data, Partners is creating new medical knowledge that will improve patient care world-wide and will also assist pharmaceutical companies in the development of more cost-effective solutions in combating disease. Facebook It was estimated in April 2014 that the number of people actively using Facebook totaled 1.23 billion. If you are a Facebook user yourself, you know that folks can and do have all sorts of things on their Facebook pages, including: unstructured text, pictures, links to other Web sites, such as YouTube.com and graphic images. Facebook includes a truly huge variety and volume prepared by rmk 041814 Page 2 Session 6: Big Data Case Studies of content. Yahoo and Google also store vast amounts of similarly unstructured data and even companies like Amazon, who rely on information system-based data for most of their operations, are retaining the Web site clicks of their customers for analysis. Given the potential richness of these data sources, there any number of products already on the market to “scrape,” group and analyze unstructured data and images. Though these techniques and technologies are in their infancy, just consider the potential opportunities afforded in the study of “Big Data” sources. For example, as an entertainment venue chain in major European cities, you could work with Facebook to learn what music groups were of greatest interest to your target populations in each urban area and book those groups accordingly. Or as a retailer, you could study the “buzz” on emerging products and plot your procurement plans and store layouts in response. In brief, you could learn about the interests of your market in real time and align your activities in real time to meet these demands. Lessons Learned: • As the costs of computing shrink (Moore’s Law), organizations are capturing more data as part of their business processes and transactions with those they serve. • As companies use more and better information systems to enable their core business processes, these systems will generate more data. • As organizations become more data savvy, they will build more data collection into core business processes. • Thanks to these trends, companies have access to voluminous bodies of data that may be leveraged to enrich their relationships with customers, suppliers and business partners, to strengthen and root out error and malfunction from their business processes, and to improve and reduce the cost of goods and services. • To achieve these ends, businesses of all kinds and descriptions require a data savvy workforce of people who understand data management and data analysis. They will also require a new generation of data and content storage, retrieval, and analysis tools to mine the gold in Big Data. prepared by rmk 041814 Page 3
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