DATA - The new oil?

DAVID SCHEERES CEO - ASPEN WAITE IN WALES

DATA. The new oil?

Data (US: /ˈdætə/; UK: /ˈdeɪtə/) is individual facts, statistics, or items of information, often numeric. In a more technical sense, data is a set of values of qualitative or quantitative variables about one or more persons or objects.

Albert Einstein said, “the true sign of intelligence is not knowledge but imagination”. He meant that knowledge is not intelligence and learning facts and formulae is not enough, but the motive of life is to think beyond imagination. In this short article I will explore some of my views on data, its use and acquisition.

In 1995 Tesco launched its loyalty club card and I, along with subsequently 20 million other UK citizens, signed up for one, as did my wife. I thought it was a great idea to reward loyalty with points that could be credited against future purchases and as many of the purchases were essential anyway, why not?

I used my card infrequently, usually on the way home from work to buy dog food, the odd bottle of wine and to fill fuel at their garage. My wife used her card when making most grocery purchases and other household items. About two years into the scheme on one Saturday morning two envelopes arrived addressed independently to my wife and I and both containing “offers” of discounts and products. The offers were completely different and it was clear that Tesco thought that I was some alcohol crazed animal lover and my wife a stay at home “nuclear housewife”. Whilst I may enjoy a tipple, on occasion such as at recent lamentable performances by our national rugby team, and I do like animals, these two facts far from define me as a person and it became immediately obvious that I was being stereotyped for marketing purposes and the “loyalty” card was really an exercise in harvesting data.

In the words of Patrick McGoohan in “The Prisoner” television series I decided instantly that “I am not a number; I am a free man” and cut my loyalty card in two. I regarded it as an intrusion and almost dystopian. Tesco now knew that I had a dog(s) and a pretty good idea of my religious or ethnic background from a couple of regularly bought items.

If you have not heard of “The Prisoner” check it out, it is a 1960’s avant-garde psychological science fiction TV series.

The true sign of intelligence is not knowledge but imagination.

Whilst I am not precious about my interests, I do try to preserve some element of privacy in my life so see no need to broadcast where I am and what I am eating on social media.

In hindsight, I now appreciate that this was my first real exposure to the value of data – the “new oil”.

Data is here to stay and is expanding exponentially more than anything else that has happened in the evolution of mankind. The very fact that you are reading this is creating data as somewhere, someone has logged the fact that you have opened this page. In this instance it will be Google and possibly Aspen Waite to determine if this article is read. If not I may not be writing another article and the value of harvesting data has been proved.

Data has been compared to oil in a commercial sense and the popular analogy is that it is the new oil but, in this instance, unlike oil it will never run dry as the volume we are creating is expanding faster than our ability to harvest it properly and use it wisely. As one industry expert analogised, “Data is like iron ore and steel.

Just like you need steel to make a bridge, factory or car, to gain analytical insight you need analytics-ready data. Data starts off like ore and needs refining into steel by joining it together, cleaning it up, making sure it’s the right data and then embellishing it with metrics.”

The Covid crisis has led many firms rapidly into digital transformation either willingly or unwillingly and the necessity to gather and value intelligence should be apparent to every CEO, CFO and COO. The problem is that there is so much data it is difficult to know what is good data or bad data and there is a real need to produce actionable data which is truly valuable.

As a result of digitalisation there is so much data available it is hard to know where to start and it is essential to evaluate at an early stage what you need and why you need it.

It is very true that bureaucracy creates bureaucracy and in the first instance companies seek to put in robust architecture and governance, for example GDPR, that they get enraptured in processes and policy making. Company leaders need to understand what is possible with data, employ people who understand it and then determine what is needed.

The best way to do this is to ask what your business goals are, what your problems are and the best way to achieve the goals and solve the problems. Choosing the right data is challenging in its own right as there is simply so much of it. The best way to harvest and use actionable data is to start with a user case or a real commercial problem that could be solved with data.

Remember that the data you consider useful might be meaningless to anyone except you so simply outsourcing its interpretation to technical people alone will probably not work as they may not recognise the value of it.

Case studies that will impress board members or management tend to be those that are easy to understand and show the value of the data by showing what cost savings can be achieved when data insights are used or what short term gains can be made utilising focused data.

Over the past two years we have experienced a paradigm shift in working practices that now include hybrid working with the reliance on a traditional office platform holding less emphasis than it did previously. Time has always been at a premium but more so now and a company’s ability to make data useful is directly correlated to its core outcomes and the ability to generate useful data is now a competitive imperative.

The value we provide our customers and clients is now becoming everything to them in a highly competitive market place and in the future acquiring a customer and retaining a customer have to be recognised as vastly different things. We all need to know what our customers want and when they want it and those that can anticipate faster than their competitors will win the commercial race.

Data also needs to be shared with affiliates and partners as data can recognise trends. Amazon are superb at this and share their insight about buying behaviour with their partners which earns their partners retention.

An emerging technology is search engine research engineering which is something I have been interested in for several years. Why for example are some competitors consistently on the first pages of search engines? With the requisite skills this is something that can be deduced forensically and you can audit a competitor’s digital profile retrospectively to determine how they arrived at their pole position. Clearly a huge driver is social media that ranges from LinkedIn to Facebook with differentiation of sector use. The platforms are global and changing by the nanosecond and your position and the quality of your content will determine your success or otherwise. These platforms can make or break trends instantly and a good marketing team needs to appreciate their value and how to use them properly.

One of our marketing consultants told me that she recently employed a specialist social media person in the USA. I was surprised as I would have assumed that such skills are available domestically. I was told that they are but employing someone in North America extended her office opening hours to 19 hours a day and in media trends can change overnight! This is how fast the market can change in reaction to events occurring globally.

There is no doubt that the behaviour and attitudes of customers is influenced by multinationals who operate on every continent and “Big Data” is truly International creating its own methodology and terminology.

As examples we have data lakes, data banks and data warehouses.

Let me explain. A data lake is a place to store your structured and unstructured data, as well as a method for organising large volumes of highly divisible data from diverse sources.

A data warehouse collects data from various sources, whether internal or external and optimises the data for business purposes.

Finally, a data bank is an organized collection of data. Databases are classified by the way they store this data. Early databases were flat and limited to simple rows and columns. Today, the popular databases are:

• Relational databases, which store their data in tables

• Object-oriented databases, which store their data in object classes and subclasses

There are other terms such as data mart and data swamp, which can be explained simply.

Enterprise Data Warehouse (EDW): This is a data warehouse that serves the entire enterprise.

Data mart: A data mart is used by individual departments or groups and is intentionally limited in scope because it looks at what users need right now versus the data that already exists.

Data swamp: When your data lake gets messy and is unmanageable, it becomes a data swamp.

So how are these resources used effectively? If we revert back to the Tesco scenario I began with, they operate a loyalty card program.

Their database might hold your most recent purchases, with a goal to analyse current shopper trends. The data warehouse might hold a record of all of the items you’ve ever bought and it would be optimised so that data scientists could more easily analyse all of that data. When I bought my bottle of Barolo on a Saturday night, some of the relevant data that could be deduced would be my age (I would need to be 18 to buy the wine) the day, time and location. From that data a specific offering could be made to me to give a discount on multiple purchases of wine on a week day, not weekend, to increase traffic on a less busy day, which could allow more time for impulse purchasing. The weight of purchases would indicate that I probably drove to the store so I would be included in any motoring offers or fuel discounts to incentivise purchases. As I write this article in March 2022 I doubt that I will be seeing many fuel discounts in the near future!

As you can see, this data has immense value if it can be harvested and interpreted correctly. Anticipation of trends and the quantum of services and products that are likely to be required is valuable to determine stock levels or staffing levels that directly impact capital employed and cash flow.

As a company we assist clients with marketing and social media that uses many platforms including radio, which produces content that can be retrieved on demand. This then can produce data that can be harvested by clients to provide an insight into their status and ranking with competitors and create innovation and change where it is needed.

We have backroom technicians that can analyse data and trends, monitor web traffic and advise strategy. We like to consider ourselves as a disruptive influence in our industry and as such we study our own data and that of our clients. It’s also worth mentioning that bad data never goes away and will probably exist on a cloud platform after we are all long gone so always think twice before hitting that “send” button!