Big Data’s New Impacts on the Customer Relationship

There was a time when states could not locate and extract child support payments from the very deadbeat dads who filed tax returns or registered vehicles with different agencies within the state. They couldn’t block lottery checks to people who owed back taxes, or identify government employees who had defaulted on student loans, or welfare recipients with large unearned and unreported incomes. All because the data was stove-piped in individual systems, with limited or no ability to share it for cross purposes, resulting in inconsistency, inaccuracy, inefficiency and lost revenue.

Data stovepipes, or silos, whether government or corporate, are often more a function of humans’ and departments’ unwillingness to share “their” data than a result of technical barriers.

Enterprise data warehouses providing a single version of the truth have demonstrated the value of integrating and analyzing data to achieve better insight, more accurate forecasting, and increased efficiency, all leading to business improvement. 

The successes have spurred widespread endeavors to exploit data to compete on analytics, and set the stage for today’s era of “Big Data.” Big data objectives demand – and the new and advanced techniques and technologies enable – greater data integration, access and analysis than ever. Leveraging ubiquitous networking, mobile devices, social networks, vast data digitization, and sophisticated analytic algorithms offers the potential to not only make better decisions, but predict behavior and even control business outcomes.  

Exploiting big data also has the potential to affect companies’ relationship with their customers in many new ways.

Data as the new capital

Companies mine data to build complete and accurate customer profiles which they can use for targeting their own marketing or sell to others, as they look for new ways to monetize data.

Many consumers feel that they benefit in cost savings and convenience from loyalty discounts, quantified self  programs, customized location-specific offers, etc.  But increasingly savvy consumers are realizing the value of their personal data and like Frederico Zannier, want a bigger cut.

When analytics crosses the line from targeted marketing to prying

Companies have an unprecedented ability to monitor physical as well as online activities, connect the dots, and analyze the results. Putting cameras behind the eyes of store mannequins may be a good way to track shopper demographics and traffic patterns, but it’s also a good way to alienate privacy-conscious customers.

And as Target proved in 2012, it’s easy to cross the propriety line using one-to-one marketing.

New  privacy and security challenges

It is difficult for laws, standards and best practices to keep up with the rapid pace of internet technology, especially  when it comes to protecting customer privacy and data security.

For example, a standard practice is to anonymize data. However, researchers at MIT and the Université Catholique de Louvain, in Belgium, analyzed de-identified data on 1.5 million cellphone users in a small European country over a span of 15 months and found that just four points of reference, with fairly low spatial and temporal resolution, was enough to uniquely identify 95 percent of them.

Organizations must beware of inadvertently compromising customers’ confidential data, thereby risking their reputation or even potentially breaking the law.

Deriving value from large data sets requires opening them up for exploration by lots of people, not just a handful of IT experts. Industry analysts worry, however, that in their rush to harness big data, many organizations could lose sight of governance and pay the price in privacy breaches, data fraud and other problems associated with gaining access to lots of data.

In fact, Gartner predicts that:

  • By 2016, 20% of CIOs in regulated industries will lose their jobs for failing to implement the discipline of information governance successfully. 
    Source: “Protect Your Enterprise Information Assets With Effective Risk Management,” Gartner Inc., by Saul Judah, Bill O’Kane, 27 September 2013
  • Through 2016, 25% of organizations using consumer data will face reputation damage due to inadequate understanding of information trust issues.
    Source: “Predicts 2013: The Nexus of Forces Boosts Information Governance and MDM,” Gartner Inc., by Bill O’Kane, Andrew White, Joe Bugajski, Debra Logan, Daniel Sholler, 28 November 2013

Dell World 2013, Dec. 11-13, is an opportunity to discuss emerging topics like this, gain insights into key industry trends, engage with industry visionaries, exchange ideas and learn how Dell is evolving to deliver the solutions of tomorrow.

 

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