Why smart data is better than Big (or small) Data

But it’s often hard for SMEs to get their heads around the value of Big Data for their business. OK, there are some nice examples of small companies using Big Data – the American zoo that overlaid weather data onto their historical visitor numbers so they could work out how many staff they would need on a rainy/snowy/sunny day, for example.
But mostly, Big Data is a bit overwhelming.
So it was heartening to hear Danish business consultant Martin Lindstrom (named one of the 100 most influential people in the world by TIME magazine in 2009) recently saying that the power of Big Data is a big lie; it’s small data that’s really valuable.
There are lots of definitions of small data, but these are three good ones: “data that is small enough in size for human comprehension”, “data in a volume and format that makes it accessible, informative and actionable” or “data about people” (as opposed to Big Data, which is about machines).
Most businesses have plenty of small data – customer numbers and spend, sales and inventory data, maybe some demographic info from customer records, or from online chat. There might be data about likes and dislikes from social media or feedback.
The problem is, as Peter Sondergaard, head of research at Gartner, says: “Data is inherently dumb. It doesn’t actually do anything unless you know how to use it; how to act with it.”
And most businesses aren’t very good at mustering their data so it can help boost sales, improve customer experience or make the company more money.
So when you come to think of it, whether data is big or small isn’t the issue – what is important is whether data is smart data.
For example, retail SMEs often know they have customers, but they don’t know who they are, what they like, when they spend, why they buy certain things, and whether a particular promotion or sale has any impact.
More importantly for the health of a business, they don’t know which customers and products are profitable, and why.
Making their data smart can make all the difference.
Take women’s retailer Max Fashions, which organised its data so it could deliver near real-time business-critical information (for example, sales, gross margins, transaction numbers and average sale price by store) to management via laptop or mobile phone.
Or take mobile phone company Skinny, which had heaps of data about its customers, but couldn’t access it to provide more targeted services for them, and make them more valuable.
Getting its customer data into a form where Skinny staff could ask questions about who their customers were, and what they were doing, allowed the company to be far more agile with product offers, for example. If one promotion isn’t bringing in more business within a few hours, they just change it.
Meanwhile, gathering more comprehensive customer information also allowed the company to confirm Skinny was popular with tourists, and create special international bundles and offerings that encouraged the international visitors to get in touch with friends and family at home.
So is Big Data dead? No. But, it might be worth ditching the name. In its raw form, data is just dumb data, no matter how much of it you have. What we need is the death of data (big or small) as a goal in itself, and see it only as a means to a particular end – just like any other business tool.

FIVE TIPS FOR SMARTENING YOUR DATA:
1 Work out what business problems you are trying to solve. What are the issues that keep you awake at night?
2 Think about what data you need to collect and understand to solve those problems.
3 Make sure the data you are collecting fuels a change in the way you do business.
4 Monitor that change to make sure it’s impacting on your business.
5 Find internal champions to be in charge of making the best use of your smart data – and upskill them.

Chartered Accountants Australia and New Zealand – bringing together over 115,000 business and financial experts.
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By Kirsten Patterson, New Zealand Country Head, Chartered Accountants Australia and New Zealand.