Wednesday, 4 July 2012

Why is big data such a big deal for travel?


The term “big data” has been thrown around the travel industry like a dark shadow of woe for the last twelve months. So what exactly is so super-size about the “Voldemort” of the digital age, he who shall not be named or spoken about openly?  I have been researching Big Data for the last few weeks, with specific regard to travel. The purpose of this blog post is to break it down for those of you who, like me, have never crunched a number in their working life.

So. Big Data. First port of call, the glittering star of the internet: Wikipedia, which describes the term as: “ In information technology, big data is a loosely-defined term used to describe data sets so large and complex that they become awkward to work with using on-hand database management tools. Difficulties include capture, storage, search, sharing, analysis, and visualization.”

First and foremost- an understanding of the basic premise is required and a good way to showcase this is through a sample:

Company X in 1995
Records simple transactional data only (offline and online) Approx 0.5 TB data stored.
Company X in 2012
Records social media, transactional, CRM, search, profiling and multiple types of data, over 95% of which is online. Approx 1 PB data.

So how does company X cope with such astounding levels of data and how can it be better managed? Well. Back in the 90’s, 1 TB of data was vast. Having data of that size automatically made you a member of the Terabyte Club (and that club was very small and very elite indeed). Now, you can buy a 1 TB data storage device for around $100 USD at a local retailer. In the meantime, even small data warehouses have exceeded data storage levels of 1 Petabyte (that is 1 quadrillion bytes if you’re wondering).  According to reports, big data is a game changer for all industries because having such enormous quantities of stored data can enable a company to better analyse and better forecast. These assumptions are based on (of course), if you can manage the data properly: Here are the exciting prospects of the big data phenomenon:

1.       Big data introduces large scale data diversity, complexity and velocity. Accuracy is the key contender as to why Big Data rules all. This isn’t singular or grouped transactional data. This is every piece of data you have ever had, at your fingertips. Patterns will be more obvious and more precise.
2.       Forecasting: Reporting, analysis and ground-breaking evaluations to help you step ahead of your competitors.
3.       Integrating your singular pricing, CRM and social systems into a super-system: where you know your hotel visitor has a Klout score of 83%, has stayed with you once since 2007, and complained about you on TripAdvisor. You know they searched for you on Travelsupermarket.com and which of your competitors they turned down. You also have the capacity to group together customers with similar behavioural patterns and target them with specific, tailored marketing.
4.       Real-time opportunities: Big Data structuring offers a user the chance to export data by the millions in a miniscule timeframe making it near-enough real-time. This is particularly relevant for picking out unusual patterns in landscapes such as casinos and entertainment parks and dealing with them immediately on-site.

So- you now see the opportunities when it comes to utilizing Big Data, but why is it so hard to implement and get our heads around?

1.       Storage and organisation: To accurately use Big Data requires different set up and different mechanics. You don’t need an analyst, you need what is fondly known in the data world as a “power user.” Someone who knows absolutely everything there is to know about data. Someone who data crunches all day but understands business functions better than your C level executives. Forget rows in excel, this is planning on a huge scale.
2.       Security & Architecture: How do you keep information of this size safe from competitors and hackers? How do you house it safely and securely whilst keeping immediate, constant access for yourself or your power user?
3.       Personnel – breeding a data culture. To utilize Big Data you need championed data-related executives who truly understand it, and they should be the one(s) making fact-based decisions for the company.  This is a rarity in most industries at this time.
4.       Understanding- The Economist Intelligence Unit gauges that the majority of profitable companies are only utilizing 50-75% of their current data to sell to, report on and analyse about. So even in the realm of small sized databases, companies aren’t seeing the full potential.  

So where are we at today? Research indicates that only 38% of the relevant companies interviewed (not just travel bear in mind) are practicing advanced analytics, whether it be Big or Small scale. Seems slight, doesn’t it? Especially considering how much of what we talk about as an industry is analytics driven- RM, CRM, Social, Transactional. As such, there are clearly a number of distinct challenges in this space: a) the sheer quantity of data b) poor organisation c) poor internal sharing processes and d) technical challenges. I am new to understanding the basics of Big Data and its scalable opportunities. So, how do I, as a newcomer, see it panning out for travel as an industry? I see it progressing inevitably, at an alarming rate. Data can only get bigger as we store more and more information as companies. Working out how to manage it better is something we are all talking about, but how many people are working on the strategy to actually implement a faultless data set-up which makes use of all data, and quick?  

Big Food for Big Thoughts, certainly. Feedback welcome, Take a Byte. Trademark Pun. 

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