Proven Ways to Create Good Profit with Big Data
[Editor’s note: This is the third of three excerpts from The Billion Dollar Byte by D. Justhy, a new book that equips companies with the tools to leverage Big Data to drive “Good Profit” and adopt a whole new business model, one that is apt for the Digital Age. Global Trade Daily thanks the author and his publisher.]
There are many ways companies can employ big data to produce good profit. There are at least six major ways that good profit can be generated with emerging data technologies:
increased revenues, reduced expenditures, profitable compliance, improved business valuation, attraction and retention of talent, and global contribution.
Increased revenue is the most direct method of increasing profits. Big data allows enterprises to better understand their own businesses and industries through the use of high-quality analytics. Data and the insights it yields can help companies increase sales, enhance revenue streams, and improve product offerings. Increased revenues are a function of the business doing better business. This is especially true when companies employ person-centric analytics to better understand the market, allowing them to maximize revenue by appealing to the right people.
The second most direct way of increasing profits is by reducing expenditures. Data collected on business processes can be used to identify and systematically eliminate inefficiencies. Methods such as process analytics are perfect for this job. Improved efficiency that leads to lower expenditures is a direct way to turn hard-earned revenues into captured profits.
The third way companies can use data to increase profits is by engaging in profitable compliance. Compliance is a major cost. Companies can lose big if they face a fine or are publicly exposed as noncompliant on issues of financial risk, safety, or corporate responsibility. Companies must ensure that all business processes are compliant with regulations. There are often many ways in which companies can comply with regulations. Profitable compliance is when companies find the most efficient and low-cost methods of honestly and fully meeting compliance. Because compliance is managed through business processes, companies have data about their compliance programs that can be used to streamline those processes. Companies should ensure that data and analytics are an integral part of their auditing and compliance programs.
The fourth way in which companies can profit from big data is through a massive increase in their business valuation. Companies achieve higher valuations by putting an emphasis on the pursuit of economic value. Value creation is the pursuit of all enterprises. All business processes should focus on value creation. There are, of course, innumerable ways to do this with big data, such as creating person-centric data practices.
Creating value is not just about what companies do. They must also consider what not to do. Initiatives that don’t create value should not be pursued. Companies that want to increase their valuation should abandon activities that don’t create economic value. These no- and low-value initiatives can be identified through data analytics.
The fifth way of creating profit with big data is by attracting and retaining talent. To do this, companies must create an ecosystem that not only attracts good people, but also one that encourages them to stay by offering rewards, growth potential, and a good company culture. Companies must reconsider how they manage people. Again, data is your friend here. Companies should employ person-centric analytics for talent management.
Above all, invest in the datapreneur. Companies need people with leadership as well as technical abilities in a variety of roles. Search for ways to train and develop staff to become your datapreneurs. All key people in a company, no matter their role, should receive continuous and relevant development throughout their career.
The sixth way that companies can increase good profits through big data is by contributing to the world. This is what makes profits good. When what a company does contributes to the betterment of the world, the profits it produces are good profits. This positive contribution doesn’t have to be “synthetically” philanthropic. Companies profit when they truly meet people’s wants and needs. This betters the world. And when data is used, it is an example of data bettering the world. This happens all of the time in the age of big data. For example, when a tech company supplies certain analytics to an industry, this betters all of society by contributing to the economy. It is also true that the companies using those analytics are now profiting more, as well as contributing more to society.
This sixth and final method of increasing profits is particularly important because it underpins the way in which profit for companies becomes good profit for societies. This happens all the time and is a function of the kind of strong free-market economy for which Charles Koch and others, including myself, advocate.
Justhy Deva Prasad, M.B.A., “D. Justhy,” is the Chief Data Partner at Claritysquare, a global technology firm that helps Fortune 500 clients around the globe transition to the digital age by leveraging data to reduce costs, recapture lost value, and generate new revenue. He is the author of “The Billion Dollar Byte” (Morgan James, January 2018).
How To Introduce Employees To New Tech