New goldmine of big data: CFOs should lead mining operations

Over the years, information technology systems in an organisation have come closer and closer to having a marked impact on a business' bottomline by enabling operating efficiencies. The internal IT function has also empowered business planning and strategic thinking, and contributed to a healthier topline. However, Big Data empowers CFOs as never before to leverage IT to make strategic business decisions.

Big Data refers to the gigantic unstructured data sets that are being created, consumed and accessed. In the last couple of years, the world has witnessed an explosion in digital data volumes, while also creating almost 90% of the data that exists today. Social networks (250 million new photos on Facebook per day), video archives (48 hours of new videos on YouTube per minute), microblogging (200 million new posts on Twitter per day), genomics, sensors gathering climate information, video surveillance, call detail records, SMS, GPS, astronomy, large-scale e-commerce, internet search records, credit card transactions, ATM records, etc, are all creating massive pools of data that are spread across the globe in different formats, technology platforms and languages.

Amazon, the world's largest online retailer, has over 1.5 billion items in its retail catalogue, which gets more than 50 million weekly. It also has more than 200 fulfilment centres globally. That is a lot of objects in a lot of places to keep track of. At the recent Web 2.0 Summit in San Francisco, Alyssa Henry, vice-president for Amazon's AWS Storage Services, explained how her company is preventing theft of its most valuable as well as highly sought-after items.

The company stores data on its S3 (SimpleStorage Service), and uses Elastic Map Reduce (EMR), a new Hadoop framework that runs on its own Web Services (AWS) toprocess these Big Data sets every 30 minutes, and feed it back to its warehouse and website. This is just an example of how large companies are using Big Data analytics to stay agile.

From Data to Intelligence

While this whole phenomenon of data explosion may look quite complex and overwhelming, it is actually setting new standards of intelligence and predictability for almost all sectors: retail, healthcare, manufacturing, telecom, BFSI, education, energy and utilities, law enforcement, etc.

Simple examples range from retailers figuring out behaviour and perceptions of their target markets to telecom companies sensing the rich data consumption to provide more targeted data services, and so on. Indian start-up CrowdANALYTIX, for example, leverages crowd-sourced ideas and contributions on social media to develop real-time data analytics for businesses.

Information is becoming more powerful than ever before as the early adopters of Big Data analytics are working hard to identify trends, correlate disparate sources of information while trying to make them easy to understand, and actionable. It is helping companies become smarter and more responsive to their customers as well as competitors.

It is pertinent to mention here that in technology parlance, the Big Data stack includes six layers, i.e., Data, Integration (Data Management), Repository (DW), Analytics, Reporting and Applications. Almost all major IT companies have entered the Big Data space, offering solutions for one or more of these six components.

Several companies are also offering Big Data solutions on the cloud. Therefore, it is important for a CFO to understand the specific needs of the organisation and, accordingly, work with the CIO to identify an appropriate solution and a partner.

As business planners, CFOs will be itching to analyse every transaction and capture insights from each customer interaction and generate value for the business. A case in point of excellent data reporting is The Joy of Stats, an amazing four-minute presentation by Hans Rosling (popular on YouTube) about 200 years of history of 200 countries - correlating the lifespan and income of people on a virtual screen. This is a fine example of the potential of management reporting that could take 'strategic planning and decision support' to a different level.

The Role of CFOs

With data flooding in at an increasing rate, companies are overwhelmed with greater customer data from proprietary (company-owned market research), public (free, Internet-based) and accessed sources (third-party reports). However, the sheer size of data ('massive') is not the issue facing organisations today. If it was so, then the challenge would have been confined to the power of PCs and spreadsheets.

It is actually the unstructured ('messy') and distributed character of data that is beyond the reach of traditional enterprise tools. On top of all this, agility continues to be a key differentiator in the increasingly competitive global marketplace. Therefore, Big Data demands a different approach to data warehousing and analytics, along with high-end storage and computing power.

Industry analyst Gartner classified the Big Data characteristics as size, velocity, variety and complexity. It adds that while Big Data is a significant issue, the bigger issue is making sense of Big Data and finding patterns to help organisations make better business decisions.

This is where the traditional role of a CFO has been renewed. As technology disruptions continue to reshape the business landscape from time to time, it is imperative for the CFOs to stay tuned, look at the bigger picture, and embrace new ways of doing business to create long-term value for their organisations.

According to Forrester Research, CFOs feel that there is a lot of money out there in all that data. While there are new technologies making it possible to make sense out of Big Data, decisions on how to leverage the data to capture value and create business opportunities will still need to be taken by people.

With the Big Data wave evolving, it is apparent that there is enormous business value in the ever-increasing digital information universe. It is imperative to take a macro perspective of this data and make agile decisions, making apparent that the partnership between the CIO and the CFO will become more symbiotic in future.

It will also be critical for a CFO to tune in to the Big Data wave before a competitor does, and that means gaining an understanding of the technology frameworks churning the data sets, and knowing how to capture the transformational business value from the 'massive and messy' goldmine of Big Data.

(The author is CFO at EMC Corporation, India Center of Excellence)