There is an insane amount of data out there.
Finding ways to use that data can seem intimidating, especially to an entrepreneur who is working 80 hours a week just to keep a new business on track. But I’d like to make the case that most entrepreneurs should be trying to incorporate big data into their businesses from the very beginning.
According to IDC, by 2020 there will be 44 trillion gigabytes of information out there; about ten times the amount of data there is today. Soon we’ll be measuring data by zettabytes — 1 sextillion bytes.
Much of that data is fleeting and fairly useless. But more and more of that data can be mined for useful information and patterns. IDC says that right now, about 22% of data is useful. By 2020 that number will climb to 37%.
That portion of useful data is commonly called “big data.” Companies like Google, Amazon and Facebook mine big data to serve us (supposedly) more relevant advertising. The CDC partnered with Google to use big data to help track flu outbreaks. American Express uses it to forecast customer loyalty and Nate Silver uses it to predict everything from Presidential elections to NBA champions.
Right now, big data is a good way to give your company an edge but in the next ten years, it could become a de facto part of doing business. Cloud computing and services like Microsoft’s Power BI, which lets businesses analyze data from Excel spreadsheets, are more affordable than ever. Things like Hadoop and NoSQL put data analyzing tools at the fingertips of any tech-savvy entrepreneur and there are hundreds of companies out there ready to offer their services to help businesses analyze the right data sets.
Take Fleetmatics for example. The $1 billion (market cap) business provides companies with small boxes that fit under the dashboard of every vehicle in the company’s fleet. The box tracks many things including miles driven, location and speed. The box works with a fuel card that tracks when and where drivers fuel up. Combining all these different data streams lets companies track their mobile workforce and measure how effectively the fleet is working. Fleetmatics can also provide metrics from other companies of the same size or in the same area so customers have guidance for setting their own benchmarks. Users can track Fleetmatics data using software or on mobile phones.
“There’s an insatiable demand for more detail,” says Fleetmatics product manager Jonathan Durkee.
I talked to some experts in the field of big data to find out what entrepreneurs should think about before taking advantage of the trove of information available to businesses.
Know the problem you are trying to solve.
Trying to make sense of big data can be totally overwhelming for an entrepreneur. A better way to think about it is as a tool to solve challenges.
“If you know what problem you are trying to solve, the technology is out there as well as the expertise,” says Tony Fisher, vice president of data collection and integration at Progress Software.
Are you trying to find more customers? Do you want to do a better job of targeting your marketing? Once you know the problem you can start to use data to find a solution. Google Analytics is an easy way to track visitors and activity on your website. Experian lets businesses check on their competition through credit scores. Once you know the problem you can do research on how best to solve it using data.
Start small and grow.
Ashley Stirrup, the Chief Marketing Officer at data management software company Talend, suggests businesses use the scientific method when starting to use big data — come up with a hypothesis and use the data to see if you are correct.
“We’ll see people do a ton of data analysis and everyone in the room has a different interpretation of the results,” says Stirrup. “That’s because they haven’t thought it through before.”
In most cases, you can do a trial analysis of the data to see if it helps solve your problem. If the test is a failure you haven’t risked much in terms of time or money. If it’s a success you’ll come out with information you can use and a path for future big data research.
Choose the right data.
Sometimes it can be difficult to find the right data to solve your problem. Mark Figliulo, founder of Figliulo & Partners branding agency, says people often hoard the best information. His agency relies on data to help brands tell their stories so now he is working on building out his own database. He will combine it with data from places like the SEC and a client’s internal information to find the stories that companies might not even realize exist.
“When a client knows I’ve gone to the data that client is going to trust me and my ideas,” says Figliulo.
Using big data is about more than just analyzing the information, it’s about taking concrete actions based on your findings. Talend’s Ashley Stirrup says that it’s important you move fast once you see the results coming out of the data.
“A client said to me, ‘If you can’t act on the information in real time all you know is how much money you’re losing,’” says Stirrup. It’s crucial that all parts of the company, information technology, marketing, sales etc. is working together toward a common goal so people can make the most out of the data as information become available.
See the forest instead of the trees.
Even if you think you can’t afford to use big data or don’t have the time, it can be an important tool for busy entrepreneurs who are so bogged down in the day to day of running a business that they don’t take the broader view. Big data can easily give you a snapshot of the business landscape you are operating in whether you want to learn about competitors or your customers. Entrepreneurs are famous for going with their guts. But sometimes even your gut instincts need a little perspective.
This article was written by Mike Montgomery from Forbes and was legally licensed through the NewsCred publisher network.