The movie “Moneyball” depicted how baseball executives were using statistics to predict outcomes, and allocating resources accordingly. Rodolpho Cardenuto, appointed president of SAP Americas in January 2013, foresees a similar approach in the business world as companies gain insights from big data.
“The only difference is that they used past statistics. The real insight is how to predict outcomes,” Cardenuto says. “I think it’s going to be a bigger revolution in business than in any sport.”
The challenge is transforming big data into actionable items. Making use of data involves taking it from infrastructure to information and then to insight. The information is already being collected, it’s a matter of how to derive useful insights from what has been gathered, Cardenuto says.
“It’s about how to get insights from the big data. We can accumulate as much information as we want. You can feed information from all over the place — social media, archives or systems — but how do you get insights from that?” he says. “Big data is about how to transform that information into something useable for the business.”
The volume, variety and velocity of data continues to grow exponentially — a compound annual growth rate of 45 is anticipated through 2015, Cardenuto says. Combined with rapid decreases in storage costs, companies are now able to store vast amounts of data.
Here’s how SAP, with its HANA database management system, is leading the charge to take that data and present relevant results to enable real-time business decisions.
Defining the parameters
Before devising a plan based on the data, you have to determine what data to focus on.
SAP employs data analysts and engages with customers to understand how they want to market to consumers so they can make the jump from big data to insights.
As an example of how that is accomplished, Cardenuto cites oil and gas companies that are SAP customers. They have wells that provide 50 terabytes of information. Using the SAP HANA application, the companies can analyze that information to determine the most cost-effective and productive way to operate the well.
“They have sensors. They can get the information they want. But the important thing here is transforming this information into insights to better utilize this well’s potential,” Cardenuto says.
Another client, a retailer in Mexico, analyzes data once or twice a week to see which products are selling, he says. That data is used to manage logistics and deliver products to stores.
“If I have a TV set that is selling in one store, I can reroute my logistics, my supply chain, to deliver more TV sets to that specific store and from other stores where they are not as much of a bestseller,” Cardenuto says.
While the same process had been followed previously, the cycle took up to three days to complete. That lag meant that there was no guarantee that there would still be the same product demand, particularly if the item were part of a current promotion, Cardenuto says.
“Now they can do that in real time,” he says. “Only with real-time HANA can they do that.”
Another SAP product, Precision Marketing, which used to be called Precision Retailing, is an application that pools historical consumer data. For example, Wal-Mart could use it to find what products customers purchased and at what time.
It can also provide detailed information about customers such as a female between the ages of 25 and 30, with or without children, employed or not, even whether a person prefers organic foods.
Of course that sort of information appeals to retailers, but it has also been used by a transit agency in Montreal, Canada, Cardenuto says.
Cardenuto envisions data analysis being taken a step further to determine why there was more demand in one region in order to predict future demand spikes. He says such predictive modeling is definitely on the way.
Along with big data and real-time insights, Cardenuto sees cloud computing and simplification as two trends that will be the focus of CEOs in 2014.
“The cloud is enabling customers to have access to new innovation as well as a return on their investment in technology faster than ever before, in weeks instead of years,” Cardenuto says.
That means businesses that adopt cloud technology can redirect those returns to investments in other technologies and business models that fuel innovation and growth.
“The cloud can be an important catalyst in any enterprise. It offers a simpler delivery model to accelerate the adoption of innovation,” Cardenuto says.
Simplification is important because complexity is a significant challenge that businesses face today, according to Cardenuto. Whether it’s in business processes or user experience, complexity slows everything down and results in longer business cycles, frustrated users and unhappy customers.
There are more mobile connected devices than there are people, making it critical to develop a simple user interface that provides a personal experience, he says.
“We have made simplification our focus. We are simplifying everything, so our customers can do anything,” Cardenuto says. “With technologies like cloud and HANA as a platform to tackle big data and integrate across applications, businesses can achieve faster innovation.”