Eric van Heck, RSM
Eric van Heck, RSM
Turning Data Into Business
Value, velocity and volume, plus variety
Professor Eric van Heck from RSM specialises in big data and explained how businesses can find and use the value component in big data. “Big data is about value, velocity and volume, plus variety,” he said. The data sets ‘thrown to researchers’ are getting bigger, and described the data produced by automated flower auction company FloraHolland as ‘relatively small, with data in gigabytes’ (109 bytes). Twitter data is measured in terabytes (1012 bytes), and the ‘complicated stuff’ is from the likes of supply chain organisations using intelligent routing for their trucks. They produce data by the petabyte ( 1015 bytes). “Even the RSM platform can’t handle this,” he said, and joked that his department has already asked the Dean for more data storage capacity. But some of the biggest data sets are produced by the scientists working on CERN’s Large Hadron Collider, who anticipate that they will soon be producing exabytes of data (1018 or a quintillion bytes) every day.
The ‘big data cycle’ describes the projected potential business value of big data over time alongside other new technologies such as Cloud Computing, Prescriptive/Descriptive Analytics, and Smart Advisors. But behind the business cycle is the growing ‘internet of things’. “Imagine if every toothbrush had an Internet Protocol (IP) address,” he said.
Three levels of value for business
Organising the cycle of setting business goals, sensing, collecting and storing data, analysing it, responding to or acting on the analysis and setting new and better goals is hugely important, said the professor. This process means that big data has three levels of value for business. First, existing business becomes more efficient. Second, and perhaps more difficult to achieve is that the business becomes more effective by targeting and segmenting customers. Third, and most difficult, is to make new business. “That’s where the real business value is, and that’s where we’re exploring,” he said. His department is already working on energy analytics, electric vehicles’ role as power plants, and buying and selling energy; these are relatively new business ideas that embrace the concept of ‘prosumers’ backed by algorithms that balance electricity supply and demand from bigger grids.
Some of them don’t have a clue …
But there are obstacles, said the professor. There is no common platform for sharing data in most companies. “They are silos; business units with different languages, and if you don't have a common digitised platform, it becomes a very difficult job.”
What’s more, users or clients sometimes will not – or cannot – engage in this new journey. Executives and managers working, for example, in finance and logistics often either don't understand big data or feel they cannot judge what the data scientists are doing.
And, said the professor, there’s are rumours that some CEOs and members of supervisory boards “have no clue what it's about,” and that makes for a dramatic situation, especially when the business needs to become more effective or there’s increasing competition from start-ups.
So what can be done? “Go back to the drawing board and look at the enterprise architecture from a business and a technical point of view,” said Eric van Heck. In addition to combining the technologies in a coherent way, he also recommended user-centric development, design around the user rather than the technology, as Apple Inc. does, and involving top management with issues of internal and external visibility. It can be difficult to transform the business from an analogue to a digital platform without this, he said.
How can this business school help you?
Professor van Heck is one of the academics behind the recently-launched Erasmus Center for Data Science and Business Analytics, a joint initiative of research groups from Erasmus School of Economics and RSM. “We have PhD candidates and students who could do research for you, we can educate your top management; we can educate technical people about business, and business people about technology,” he told the Summit audience.
“The value is in the combination of business and technology people talking to each other,” he said.