Big data is usually associated with web companies like Google and Facebook as these companies gain advantage by analyzing large volumes of user’s data. Get Satisfaction released this month several interesting claims about opportunities for big data stored in 17 key industry sectors. It reveals a massive opportunity for big data in untapped industries, like manufacturing. However, there are issues to address before providers of big data solutions such as Cloudera and its competitors can explore these possibilities.
McKinsey Global Institute published last May the “Big Data: the Next Frontier for Innovation, Competition and Productivity” – a report from which Get Satisfaction drew its numbers. The report highlights that “data have swept into every industry and business function and are now an important factor of production, alongside labor and capital.” It also claims that “big data has the potential to cut operating costs by nearly 50% across all sectors of manufacturing.” Market segments such as manufacturing are generating more data volumes than the technology sector. Manufacturing produces 966 petabytes compared to health care (434 petabytes in 2009), banking (619 petabytes) and ICT/communications (715 petabytes).
When working with big data, knowledge-based industries has more advantage since it has the combination of knowledgeable staff, dependence on IT systems and changeable processes and workflows.
In a physical environment that dominates manufacturing, there are still opportunities to analyze data at scale. As an example, currency fluctuations, fuel prices, stock levels, suppliers contributing components and the weather can result to a more efficient global supply chain. It can bring more opportunities for small improvements in shipping time and delivery of various components. McKinsey’s analysis suggests that 2 to 3 percent profit margin can be added into every product. This percentage increase seems small but eventually adds up as global businesses sell millions of units.
McKinsey’s analysis also points out the lack of employees with the skills that can explore data-based opportunities, citing that the U.S. has a skilled shortage of 140,000–190,000 staff. Even in companies such as LinkedIn and Google, hiring staffs with the necessary skills has proven to be difficult. To fulfill the need for skilled staff, Cloudera is establishing a business dominated by professional services and consultancy engagements with clients.
Aside from the skilled staff shortfall in manufacturing sectors, a gap between technology companies with big data solutions to sell and the customers for whom these technologies could deliver value also exist. As an example, Cloudera has a number of customers for its Enterprise product, but its customers are mostly from ICT/knowledge-worker space. Only two of the eight manufacturing companies fall outside the high-tech area, and these are John Deere and Bridgestone.
Get Satisfaction’s report and McKinsey’s analysis highlights the large untapped potential, both in traditional information markets and beyond. It points to the continuing need for the new sectors, such as the manufacturing to do more than just sell today’s software.