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Why haven't SMEs cashed in on big data benefits yet?

In a Q&A, author and consultant Dale Neef talks about how the shortage of big data skills is keeping small and midsize businesses from cashing in on new analytics technologies and applications.

Big data analytics can dramatically change the way businesses operate, but so far larger organizations have been the prime beneficiaries. Small and medium-sized enterprises (SMEs) have yet to reap the same value. In this interview, technology consultant and speaker Dale Neef, author of the new book Digital Exhaust, explains why big data benefits have largely passed SMEs by and what they can do about it.

What factors do you think drive the hype behind big data?

Dale Neef: The hype is that it is being used for customer-facing purposes and that it works for advertising or you can sell that data. If you're looking at big data as customer-facing, then you get into the unstructured data, which gets you into NoSQL and Hadoop and those technologies that can take advantage of the pipeline. The thing is, I think what we're finding is 80% of businesses are dealing with less than two petabytes of data, and 60% say they just want to do better analytics with the data they already have. All of that's relatively easy to do with common analytics.

What role do you see CIOs playing in big data?

Neef: You see a number of companies in the marketing and sales sides of things coming up with chief marketing data officers who really understand [their] function's needs. Maybe that's a good thing. You have to have an operational view of the data you need. CIOs don't necessarily have those skills. You're still going to have to have people who understand Hadoop or NoSQL, and you'll have to have data analysts and scientists, and they'll have to figure out what sources they want to pull it from. Those skills are kind of different than what CIOs have. [Those skills] are more methodical and hypothesis-based. That's PhD stuff.

In Digital Exhaust, you write that small and midsize businesses are behind the curve on big data adoption. What are some of the things that smaller businesses can do to move from traditional BI and data warehousing to take advantage of big data benefits?

Neef: Most SMEs don't want to get into pulling most of this in-house themselves. They probably also don't want to get into bringing in data science skills. So that throws them into the cloud. If they're going to collect everything on everyone who's their customer, they can't store that themselves. So they're going to end up renting these systems. But one size doesn't fit all, so if you're going to rent something through the cloud, someone at your company is still going to have to decide what data sources you want to use and how you want to use it, so you're still going to have to pull some skills inside. So I think it is a problem. The packages are there with software as a service or application, but I think that SMEs will continue to find it more difficult over the next few years for those reasons. If you don't have the resources and the skill set, it's going to be difficult.

How should SMEs go about finding the big data skills they need?

I'm skeptical that you can easily turn that big data into sales.
Dale Neefauthor of Digital Exhaust

Neef: Nine out of 10 of the highest paying IT salaries are loosely in what you would call the big data disciplines. They're pretty expensive, and the big companies are sucking them in as quickly as they can. I think it is difficult because you start to have a buildup of problems. The CIO is not sure if he wants to get into these types of things, you don't have the in-house processing capabilities, so you're trying to go through the cloud and you still need to have some in-house expertise. I think it's very difficult, and I think this is what's holding things up. You find a lot of young people throwing themselves into it, but it's going to take some time before you get a surfeit of skills that start filtering down and they're not as expensive.

With the high cost of these skills, is there an ROI for smaller business to make on these high-priced workers?

One pixelBig data management tools still of value

Neef: Well, I'm skeptical. Sixty percent of companies simply want to do better analysis on the data they already have. Target and Wal-Mart have thrown massive amounts of money into analyzing customer data, but I don't think anyone would say there has been a sea change in the way we deal with those companies or the way they deal with us. You haven't seen it in their share price or in their sales. We know that broadly there is a global shift that is moving toward collecting customer data and using it to try to sell. Even at that level, you're not seeing something completely different. They're not selling 60% more than they did before. But there are costs associated with this, and I'm skeptical that you can easily turn that big data into sales. Sales and marketing people will say, "Yes, you can," and that may be true, but I think it's more of a transfer of resources from print and television to Web and mobile. I don't think sales increase, maybe customization is more efficient, but I don't see it being a sea change in productivity. That is even [truer] for small companies.

So you think smaller companies should focus more on data warehousing and business intelligence reporting?

Neef: Yes, your basic BI and analytics tools are very good. They usually have all the information that comes from data that companies really need.

Ed Burns is site editor of SearchBusinessAnalytics. Email him at [email protected] and follow him on Twitter: @EdBurnsTT.

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