Big data: It’s the buzzword of the decade and regularly dominates the headlines as brands and enterprises of all sizes attempt to make sense of the rapidly-increasing amounts of data sets there are available, both publicly and on their own platforms.
But the volume is growing so fast, it’s hard to keep track of everything. According to IBM, the world was already producing 2.5 exabytes – that’s 2.5 billion gigabytes – of data every day in 2012. And while larger household names that have millions of customers and interactions with their services may have the resources and funds to invest in analysing these data points (the Met Office, for example, recently commissioned a £97 million supercomputer to decipher trends and produce more accurate weather forecasts) small businesses rarely have the time or budget to spare.
That said, SMEs shouldn’t just give up on data analysis altogether. In fact, there are a lot of questions that can be answered with just a few data sets, or ‘small data’. For example, how is the weather impacting my sales? When is my customer likely to pay their invoice? Am I at risk if I trade with this company?
None of those require reams of data to answer; smart extrapolation of insights from smaller titbits is all that’s needed. But when used to inform business decisions – to market more or less aggressively to match the sunshine, to affectively plan your cash-flow forecasts, to cut or strengthen ties with a supplier, they have the potential to drive significant results.
So, how should SMEs go about harnessing small data? Here are four questions to ask yourself:
What data do you need?
Note that the examples of small data insights I used above all started with a simple question – not data. It’s important that you sit down and identify the most pertinent challenges your business is currently facing in order to determine what data could have the most impact on your objectives. It will make spotting trends much easier further down the line, instead of downloading the data first and sifting through in the hope of finding something useful.
Where do you get it?
If your own data holds the answer to your problems, then you need look no further than your own (virtual) four walls. However, if you’re looking to do some market research or a recce on a competitor, you’ll probably need to go further afield.
There are several free databases available. The Office for National Statistics for economical statistics, Data.gov.uk for government data sets, Ofcom for digital behavioural insights; and even our own CreditHQ for company credit and payment indicators, so it’s worth researching what’s already out there in the market.
How do you organise it?
Nowadays there is, of course, a wealth of tools and software options available for advanced data analysis. But in reality, the humble spreadsheet will often suffice for tracking trends, segmenting insights and building charts and tables.
For example, if you’re looking to understand your customers’ purchasing behaviour better, input your figures into Excel or an equivalent and create a chart of your sales over time. Once you’ve formatted your data, you can then use formulas to calculate your moving average on a daily basis, or record month-on-month fluctuations to predict what long-term growth might look like.
How do you apply it?
Don’t forget that data in itself won’t drive your business forward, it’s how you apply it to make meaningful decisions. If you’ve started noting that a key customer has started paying you late, what does that mean for your finances today, or in six months’ time? Should you be negotiating stricter payment terms, or cutting ties altogether? What you learn may well challenge how you’ve conducted your business to date and make you revaluate your model, but it’s important not to let valuable insights go to waste and see change through to the end in order to gain that competitive edge.
It’s easy to get overwhelmed by the amount of facts and figures that are being pumped out of platforms every day, but if SMEs were to concentrate their efforts on unravelling just a few key, smart insights, they could transform the way they operate to navigate rocky waters and even challenge their larger rivals.
Martin Campbell is managing director at SaaS company Ormsby Street.
Further reading on big data
