by Rob Enderle

EMC Shows the Power of Big Data Analytics

Nov 16, 20126 mins
AnalyticsBusiness IntelligenceData Management

Your company is doomed to fail if 'the biggest jerk at the table' makes all the decisions in spite of comprehensive data analysis. EMC and its customers are taking analytics seriously, columnist Rob Enderle says. You should, too. It's a lesson Mitt Romney learned the hard way.

This week I attended EMC’s analyst briefing, but before things started I had dinner with Jim Bampos, EMC’s vice president of quality. Bampos is arguably the technology industry’s leading expert in the area of customer care, with one patent in hand and two more in process.

I’d also just finished a review of the use of data analytics in the U.S. election and in that exercise had been fascinated by the fact that Mitt Romney didn’t use analytics properly and President Barack Obama did.

Romney had better tools but outsourced the effort, while Obama created the capability internally, and the result is now history. What fascinated me was that the candidate who was a former CEO and widely believed to be the more capable manager clearly didn’t know how to successfully use analytics—and likely mirrored many executives who use the buzzword but don’t really understand what it means.

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EMC, in contrast, is using analytics from its Green Plum acquisition to not only provide better service but to shift resources to areas where they can provide the greatest return. EMC is about to implement this competitively to focus customer acquisition efforts on area where its competitors are the most exposed.

Why Most IT Executives Hate Valid Data

What is fascinating about how analytics are used–and I think this played out in the recent election–is that they often fail against the common practice I call “biggest jerk at the table.” The Argumentative Theory argues that people care more about winning an argument than they do about being right. When applied to business, this means that decisions are often made based on who is the most powerful person at the table. While the practice assures personal power, it also leads to a lot of mistakes.

Big data analytics can provide information that puts the data scientist in the position of power. The executive, to preserve his power, must resist. Rather than assure the accuracy of the data, efforts are made to make the results conform to the beliefs that powerful people already have. Not only are the decisions increasingly wrong, but data analytics is made redundant.

Why the Smart IT Executive Loves Valid Data

However, executives are increasingly learning that valid data leads to more accurate decisions, which in turn assures career advancement (in the form of far fewer catastrophic mistakes). This is playing out within EMC and an increasing number of EMC customers, all of whom who are applying data analytics to a diverse set of problems and reaping incredible benefits.

Not only is EMC able to anticipate equipment failures up to six months in advance, but the company can now identify which customers are most valuable, most at risk and too expensive to retain. Soon EMC will be able to analyze competitors this way, too. The result will be the capability to turn at-risk customers into loyal customers and to optimize sales efforts to target a competitor’s most vulnerable customers, therefore optimizing its customer base for revenue and profit.

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EMC executives are finding that they can make better choices between investment alternatives from adding new product features to balancing cost and services. For instance, they discovered that shipping support overseas was unprofitable—the money saved wasn’t worth the ensuing customer dissatisfaction—and now domestic support is a competitive advantage EMC uses to retain and increase customers successfully. This lets EMC executives make difficult decisions more easily and with far less risk.

When briefed on this capability, EMC customers were initially upset—not because EMC knew so much about them, but because EMC hadn’t shared this capability so customers could do the same with their customers and products. In fact, resellers who had been resistant to providing access to their customers agreed to do so once they saw the result, in exchange for the capability to share the results so they, too, could optimize their sales efforts. Clearly, they’ll be interested in competitive customer acquisition opportunities as well.

With Big Data Analytics, Accuracy Trumps Speed

When I get a briefing on an analytics system, the focus is often on the amazing speed the system can provide—but speed has little advantage if you can’t assure the accuracy. Getting bad data more quickly does you no good. If you can assure the quality of the data first, then speed is an advantage. The losing party in the U.S. elections appeared to optimize performance, while the winning party focused on accuracy by internalizing the big data analytics effort and assuring accuracy first.

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The only way a vendor will understand this is if it uses analytics successfully, as that’s what turns a tool with the potential to do either good or harm into a successful solution. If you have a relationship with EMC and haven’t met Bampos, you are missing out one of EMC’s most powerful solutions, and his off-the-cuff, candid presentation will make you wonder why your company can’t do what EMC is doing.

Be careful, though. CEOs, upon seeing his pitch, can become instant lovers of this approach. The result could be a ton of work—but, then, the result could be a much more successful company, so the work is likely worth it.

Put another way, the successful use of Big Data Analytics will eventually make your company and your competitors more successful. It would be wise to make sure it happens in that order.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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