In 2008, when Airbnb launched, the American online vacation rental marketplace company made sure to include a data scientist among its initial team so that it could evolve as quickly as possible. Guess what? The company recorded a whopping 43,000 percentage growth in just 5years.
Relating this to a more familiar brand, Netflix, currently the biggest video streaming platform in the world with over 192 million subscribers as of Q2 2020, is very popular not only because it offers tons of quality and “not-so-quality” movies, but mainly because at its core, it is more of a customer-focused data-driven business.
Take for instance, you watched “6 Underground” on the platform, the moment you are done watching, you’ll most likely get a suggestion to watch “Extraction”. Here, the popular guess for why that is, is that both movies fall under the same category of Block-busters. However, behind the scene, Data analytics and application play a vital role at offering users the luxury of unlimited choices. This, among other things is what is shaping not only Netflix, but the streaming industry as a whole. However, Netflix is winning the data-war to stand firm at the top of the competition.
Having stated the above case studies, understanding the importance of data in running a business should not be rocket science. According to Wikipedia, data are characteristics or information, usually numerical, and often collected through observation. Simple enough, yeah?
In a more technical application, data is a set of values of qualitative or quantitative variables about one or more persons or objects. For the inquisitive ones, a data is a plural form of datum, which relatively refers to a single value of a single variable.
A Brief History
Back in 1946, the word “Data” was first used as a technical term which translates to “transmissible and storage computer information”. It was subsequently used as an expression; “Data Processing” sometimes in 1954 after which it was widely accepted as a general term synonymous to “information”.
While the word data is often attributed to computer or computation, its usage and application have evolved over time. Now, beyond storage, data plays a significant role in driving modern businesses and operational processes across various sectors and organizations as well as decision making in the information system.
Role of Data in Business
There has been a great shift in the business world across different sectors. This is due to the fact that modern organizations are adopting a more sustainable, strategic, and consistent operating model, thanks to accessible data which has now become the backbone of these organizations’ operations.
It is no surprise that there has been an increasing need for data collection, analysis and application in modern organizations and businesses. The reason is that data has proven, over time, to be the only constant factor in scaling up businesses. As a matter of fact, data is the train that the digital economy rides on for sustainability.
Guess what? Studies have also shown that by the end of 2025, more than 175 Zettabytes of data will be generated each year, a figure that is up almost by 75% compared to what was recorded from 2018. This only goes to show how important and demanding data will be in the nearest future.
Currently, the need for data in an organization is no longer a luxury; rather it is a business necessity, at least for those who want to scale up their growth. For instance, Google’s parent company, Alphabet, has spent over $105 billion between 2013, and 2019.
In 2019 alone, Alphabet spent approximately $26.01 billion just for Research and development, about 16% of its overall $162 billion annual revenue during the year in review. That shows how important data is to the tech giant.
Facebook is another tech giant that spends hugely on R&D. The American social media conglomerate corporation spent approximately $13.6 billion on research in 2019 alone, about 19% of its overall $70.7 annual revenue.
For a business to stand the test of time, it is essential to channel a significant portion of time, fund, and focus on Data collection and application.
Data plays the following essential roles in scaling up business growth;
Unlike the old times when monopoly was a prominent topic, now, competition is almost inevitable across most business sectors. Having a core knowledge, or in this case industry insight, allows businesses to survive the competitive nature of a particular market.
Knowing the number of competitors; the number of competitive products; sales per-region; product demand, among other things, allows a business to function dynamically, while standing the test of time.
Possessing industry insight is not synonymous to automatic success in business. The possession of key information in an industry only means that you have what it takes to scale up your business tremendously. The saying “data is the new oil” comes to play here, if unrefined; data is as good as nothing.
CA is the process of putting side-by-side key information such as market shares or product sales from different competitors, and measuring them by numbers/percentage in an attempt to determine what works, what does not or perhaps the favoritism factor among the quantitative variables.
While numbers are mostly used during competitor analysis, other non-numeral metrics like SWOT analysis, brand perception, share of voice, negative reviews among others also play a significant role in arriving at a good CA which in the long run can determine how the company can out-perform its competitors.
It is also essential to note that a well-detailed and informed competitor analysis can help improve the overall business operation from the top (the management), to the bottom (final consumers). Likewise, Data can go a long way in selecting the right hands for a specific job role, saving the company both time and finance during recruitment process.
The best way to maintain a good brand perception is through consistency. Not just with quality of a product or service, but also with respect to distribution and application which can only be perfectly achieved by keeping relevant and up to date record of data.
How do you know the number of products that are needed in a market, such that there are no excesses in one while another is short of product? Keeping records from distribution, market sales, etc. is not only to help calculate the company’s return on investment (ROI), but also to develop routines and momentum, as well as avoid misappropriation of resources.
Access to the right and relevant industry data will not only allow a company to predict the future but can also influence its choice of decision. Making a smart move such as picking the right time to produce, deploy, and strategically take over the market is dependent on the amount of relevant data that is available to the company.
Streamlining this to advertisement, a resourceful data can save an organization from having to spend a ridiculous amount of funds on a wrong ad or “shotgun advertising” as it is widely referred to by corporate agencies. Apart from the cost impact, the availability of the right data can influence the choice of advertisement; which can either be informative, persuasive, or perhaps a reminder to the target audience.
Before the introduction of Eyowo sometime in 2019,the fintech space in Nigeria was filled with several strong players like Paystack, Flutterwave, Carbon, Paga, etc.all of whom made use of similar business modules. In an attempt to disrupt the already overpopulated market, the Softcom-owned fintech startup, Eyowo, introduced a revolutionary peer-to-peer payment system that allows people to send and exchange value using their phone number, an initiative that is very uncommon in the fintech space. This is thanks to the company’s data-driven research team who were able to discover the unexplored opportunity.
Apart from proffering a solution to a common problem, data can also serve as a tool for spotting new opportunities. Fact be told, this is by far the most relevant part of scaling up business growth; apart from the obvious reason which is to set an organization atop of the competition, it also offers the target audience enough room to pick from a wide range of alternatives.
A few concerns though…Majorly for Data-collection Platforms
Having stated the essential role of data in driving a business, I’m afraid there may be a lot of primary concerns for a data-collection platform whose business is solely to collect data and process it for profitability.
Although, data is easy to come by, it can be really daunting when it comes to collecting and processing a bunch of industry statistics which also comes with quite a number of concerns and regulatory protocols.
Here are some of the major challenges that data-collection platforms are often confronted with;
Dealing with multiple competitors means that the process of collecting data across board is vulnerable to adulteration. In some cases, some competitors would prefer to withhold certain information.
The process could become even more complicated if one has to work with a bunch of wrong information, which automatically flaws the goal of a research. If care is not taken, the negative impact could be aggravated during the application of such information, hence the need to build trust during the process of data-collection.
Getting a source of data to trust you with their classified information is as important as the data itself. So yes! Building trust either by legal binding or mutual understanding is very essential.
In a market like Nigeria where industrial competition can be very toxic or driven by biased decisions, it can be very daunting to have easy access to competitors’ actual numbers as most people are often conservative with such details.
Although the reason for this cannot be readily ascertained, in most cases, organizations attribute this to privacy concerns, while in some other cases, to avoid interference from the government. Either way, Data conservation by competitors is one of the prominent concerns for data-collection platforms.
Take for instance the fact that the last time payment solution company, Paystack, issued a financial report of its annual transaction was in 2018, when it reportedly transacted N10 billion per month. Afterward, the company has rather been silent with how much transaction it carried out annually. My guess? The company is avoiding government interference.
Interestingly, Paystack is not the only fintech company into such practices of data conservation. The majority of the key players in the space including Carbon, Paga, eTranszact, are also fond of hoarding key business information. Again, it is important for data-collectors to sell trust in exchange for classified information.
Lack of Quality Assurance Process
This is similar to the initial challenge of adulterated data. But in this case, this issue comes up when a piece of information is wrongly inputted in a database. Sometimes due to the complexity nature of the data, or perhaps its bulkiness, there may be limited opportunities to confirm information by an analyst.
In an attempt to solve this common challenge, most data-collection platforms are switching to a digitalized mode of collecting data, mostly by using a dedicated website of online form which has proven to be more accurate over time. This also bridges the gap of IT restrictions experienced by some organizations.
It is almost impossible to talk about data-collection without putting privacy policies into context. While this is not supposed to be subjected to any form of antagonism during the data-collection process, it can be very demanding to go by.
Although data or information privacy is a subset of the data security concerned with the appropriate way of handling data, it plays a more complicated role during data collection with respect to human factors.
When people are aware that their data is randomly being placed on a platform, they tend to be on edge, usually for the fear of the unknown, and in some other cases, fear arising from the thought of potential security breaches. This can be very daunting for data collectors, who have to, by all means, assure its target audience of their data safety.
For this reason, it is quite important for data-collection platforms to be accredited by a legal authority such as the Nigeria Data Protection Regulation (NDPR).
Future of Data-collection in Business
In the future, businesses will largely depend on data, and the ability to scale up will be determined by the quantity of classified information it has access to. One can imagine how costly that would be for organizations who haven’t fully adopted R&D as a necessary part of their sustainable business module.
The now popular phrase that says “data is the new oil” was first used by British mathematician, Clive Humby in 2006. In as much as he wasn’t exactly referring to monetary value, the quote holds more caution than celebration. According to Humby, “Data is the new oil. It’s valuable, but if unrefined, cannot really be put to effective use or, drive a profitable activity”. In simpler terms, just like crude oil, unrefined data is as good as useless.
Over the years, trillions have been made from crude oil which at some point happens to be the cash cow in the global economy, although, there is beginning to be a change in the narrative with modern initiatives like Renewable energy.
In Europe for instance, a recent report revealed that green energy beats fossil fuel for the first time ever, and even though this has been predicted a long time ago, it is only a matter of time before the world, in general, adopts newer alternatives over crude oil, some of which include Data-collection.
In summary, modern businesses are driven by the need for up-to-date information, while pursuing data-driven intelligence which enables them to meet the demand of the now intelligent environment.