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Agenda 2020

Do companies pin too much faith on Big Data? Add to ...

The Agenda 2020 series asks experts to discuss what business leaders should be doing now to prepare their organizations to be healthy, efficient and growing by 2020. Read more at tgam.ca/agenda2020.

Many large companies – and a lot of smaller ones, too – are using copious amounts of customer information to drive their business decisions. The proponents say that “Big Data” – large, complex data sets that companies can mine for consumer insights – will allow buyers to receive more targeted information and be less inundated with useless messages, and also help companies target sales and provide better customer service. However, issues such as privacy and transparency still remain. As the speed and volume of data collection only appears to be accelerating, what can businesses do to take advantage of this trend, avoid the pitfalls and position themselves competitively? The Globe and Mail asked two of Canada’s leading Big Data experts, Pat Finerty, vice-president, alliances and business development for SAS Canada, and Stan Matwin, director of the Institute for Big Data Analytics at Dalhousie University.

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Big Data is everywhere now. Are companies becoming too reliant on what the numbers say?

Pat Finerty: No, we’re not too focused on data. The promise of Big Data is that companies can make a real improvement in the relevance of how they interact with the public if they can really understand our preferences and anticipate our needs. They can not only provide compelling value propositions, but they can also stop inundating us with irrelevant messages, spam and e-mail that doesn’t interest us. Big Data offers great promise in this area. We’re at the beginning of learning how to exploit that opportunity.

Stan Matwin: There are two things driving this. We now have a very large data set that wasn’t available before and technologies that actually work with these data sets are more affordable. We can take these data and answer significant questions from the business side, but we’ll also be able to exploit answers to the social questions.

How will privacy play a role in Big Data’s development?

PF: Privacy is an important issue. It’s tied up in the concept of privacy as transparency. The No. 1 sin that any organization can commit is to not be transparent about what their intentions are around how they use customer and supplier data. I think the vast majority of the public is willing to allow companies to take advantage of their data, if they know exactly what it may be used for.

But will companies be transparent? A lot was made about Target using data to market to pregnant women.

PF: That’s an excellent example because whom you use the data with is important. I have two kids and, when they were infants, we were part of a loyalty program that had deals on diapers and kids clothes. We loved it and so I think it all depends on how you execute and leverage that information as to whether you will have a positive reception. It’s the old concept of permission-based marketing, but you have to be that much more precise. You see a backlash where companies are still figuring out the right way to do this. When you’re taking liberties with information, you’ll get that backlash.

SM: A lot of these programs are opt-out. People have to take an extra step and, for many of them, that may not be obvious. There should be more opt-in where you have to do something to be part of these offers. That’s important and something that the public should be able to make more use of.

Will we truly be able to make that choice? For instance, people who want to use an app have to allow that program to access all sorts of data. They can say no, but people really want to use that app or they’re missing out.

PF: When you opt in to use an app or other technologies, that’s fair game. You have agreed to let them use the data. But there’s more to it than that. If they’re continuously reconfirming with you and don’t abuse that by taking a direction not implied by the agreement then that won’t be an issue. But that is the dark side of this. If there isn’t transparency and there aren’t attempts made to fully harness information and use it in a relevant way then companies will get into trouble.

SM: Here’s another example of why opt-in is so important. You could go into a store and leave with a basket of goods. Then you can get a message that says, “Do you realize you have 20 per cent more sugar in those groceries than what you should be getting at your age?” On one hand, that’s good information, but on the other hand, you can see how people may get upset and treat that as an invasion of privacy.

A lot of companies are making decisions based on what the data is telling them. Where does that leave gut feeling, which has driven so many entrepreneurs?

SM: It’s actually much easier to realize goals and ideas than it was before because of Big Data. The technology has become affordable, so the barrier to entry to create an interesting business idea has gone down tremendously. The data can help with that. It’s easier to access and it’s cheaper.

PF: There’s definitely room for entrepreneurialism, and instincts and risk taking are still critical. People can understand whether something is a true opportunity or not based on having years of experiences that they’ve internalized. It feels like it’s instinct or entrepreneurial risk taking, but in fact it’s our own mind’s ability to process data from our experiences. Instincts are informed by data.

Where are we on the Big Data curve? Where’s this going?

PF: It’s accelerating. Two years ago, every major SAS customer had a Big Data proof of concept. They said, “Could we do this?” The answer was: ‘Yes.’ Now they’re saying, “How can we do this properly and differentiate our offering?” They now get it, but now we’re figuring out how to marry all sorts of data, like cybersecurity, machine-to-machine, geo-data. How do we put that together and move the needle on customer experience and speed of product to market? That’s where we’re at today.

There have been some credit card security breaches in the United States lately. Does security still have to catch up to advances in Big Data technology?

SM: We need to do much more research around the area of security. It’s really ripe for a major breakthrough. There are some interesting ideas regarding technological solutions for privacy and security. So far, we’ve taken a reactive approach to rules and law: something happened, so we’ll do something – that’s reactive. How can we be proactive by protecting data to make sure breaches don’t happen, so that it’s very difficult for a hacker to break into?

PF: We think of breaches as isolated events, but we believe there’s a massive amount of activity that’s not being reported. So security is going to be an explosive area.

Any last thoughts?

SM: There will be large-scale applications that will enable society to function better in terms of urban planning, health delivery and in other ways, but right now a lot of data is proprietary to Google, Facebook and the government. If it stays that way, we’re not going to get there. We need a debate around a new deal on the data that will be on one hand exploiting these incredible potential benefits on the other hand be conscious of privacy risks.

PF: It’s here to stay. It can be a positive force for harnessing location-based data, social media information and transactional data. It’s a massive challenge, but we have a great opportunity to make people’s lives better and make companies more efficient. It’s an exciting time.

Responses have been edited and condensed

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