Analytics in the individualisation economy
SAP Malaysia’s MD Terrence Yong has viewed digital economy as the economy for individualisation. “More specifically it’s about how manufacturers engage customers to give them what they want, at the time they want it at the cost that is efficient,” he explained.
This is able to happen during this day and age because of all the data that is being captured, collected and analysed to produce predictive-type of insights. “Because of data points in the market, retailers would be better able to offer real-time promotions in the current and future time-frames,” he said.
Because of the advantages that digital tools are making possible today, Yong thought that SMEs would benefit from participating in the digital economy. But they also stand to suffer the most if they do not innovate.
Rolling with the punches
The digital economy hasn’t been kind to traditional and established businesses. IDC Research Director Jun Fwu Chin shared the case study of a Malaysian-based paper and packaging company that is one such type of company.
“This company faced challenges because of disruption in a declining paper and packaging industry,” Jun said. In a disrupted industry, competitors may have found a way to offer the same products at lower prices while keeping costs of operations lower because of more agile and efficient processes. Demand for paper products also likely may be declining because of electronic forms of media that have come around.
“Using big data which they mined from internal and external sources, they discovered two megatrends – an ageing population and urbanisation,” Jun said.
An ageing population cause the company to refocus their company business to manufacturing adult diapers. They even took it a step further, working with healthcare service providers to embed chips into diapers. With data collection possible from thereon, more things are possible.
Because of urbanisation as well, there is need for better sanitation ie. public toilets, and this prompted the company to also start to supply toilet paper.
Jun said, “Because (of these steps) they are not competing with traditional players anymore, but may even be disrupting others (in other industries) out there.”
What is it that’s really happening?
SAP’s Head of Analytics and Insight Kathleen Muller said, “A company may no longer sell relevant products to the masses, but SAP can help with analytics to realise its full potential.”
SAP believes that selling to everybody in effect is selling to no one, during this age of individualisation.
She also revealed, “(SAP) customers understanding their business is important because they have all these data sources now. But reality is, they don’t know what to do with it. Most companies in Malaysia are undergoing this now.”
SAP believes they may have the answer in Business Objects that sits on SAP’s public cloud. Muller described it as an analytics and visualisation that is priced for SMEs with a subscription model. Of pertinence, no data is stored on SAP’s public cloud
“Business Objects cloud is not about data exploration and visualisation only. As organisations mature they have access to more functions like predictive and exploratory analytics, and even planning that comes with templates that are based upon best practices of different companies of different sizes, globally.
Jun opined that a tool like this would be helpful for example to manufacturers that are concerned about the impact of exchange rate fluctuation. “Visualisation of its impact upon business and production levels, is important for them.”
Jun also shared annual survey findings that nearly 100-percent of companies surveyed have some sort of analytics investment. This wasn’t the case just two years ago, although a majority of these investments today are tied to business outcomes like cost and productivity optimisation.
Jun added, “However, there are instances of companies that have moved beyond these initial stages.”
Industry perception right now is that big data analytics is a by-product of the Internet of Things (IoT) – sensors everywhere and embedded in everything that collect data which is then put through an analytics process to derive insight that would drive decision.
SAP works with data from these sensors but also data that are collected from social media and more. So, Twitter sentiment about a brand for example can be derived from detection of positive or negative Twitter posts.
Muller commented, “IoT is opportunity to extend part of customers’ business model and reach out further into ability to customise what they offer their customers.”
This is aligned with individualisation, as more insight into customer preference can help companies further finetune what they offer their customers.
Yong said, “The business that is not agile and does not provide choice to customers, will lose. And that choice can’t be at high price; so this requires rethinking and reworking of their supply chain management so that they can do things in bulk and bring down cost.”
For example if there are enough customers who want their motorcycles in a certain colour or with a certain bike part, the cost of offering these ‘customisations’ can be brought down.
Yong concluded, “SAP doesn’t make sensors, but in next five years will have to work with sensors and robots. Everything that robots do, everything sensors capture… creates data that SAP works with.”