Information Insight: The Next Key to Competitive Advantage
Today's uncertain economy, characterized by increased competition, reduced product cycle times, expectations of 24/7 service and eroding customer loyalty, is challenging companies to respond more quickly and precisely than ever before. At Accenture Technology Labs, we believe that these challenges can be addressed by applying near-real-time analytic capabilities to new sources of data.
A wide array of emerging technologies is enabling the detection and collection of both physical- and virtual-world observations that were previously unavailable. Researchers are developing a new generation of business insight applications that will allow companies to see new aspects of their business and competitive environment.
In recent years, many companies have successfully deployed supply chain management (SCM), enterprise resource planning (ERP), and CRM software to optimize and improve their operations. While, these systems generate a tremendous amount of information about the state of a company, most businesses typically analyze last year's data to plan for next year. New applications that combine increasingly real-time analytical capabilities with CRM, ERP, and other emerging sources of data will enable companies to observe current situations and respond appropriately in the present, rather than only in the future. Ultimately, the result is continuous business intelligence influencing decisions and actions that impact a company's bottom line.
New Factors Influencing Insight
Before we explore the potential for information insight, it is necessary to understand the factors leading to this new business capability. The next generation of insight applications will emerge from the confluence of four principal factors - new sources of data, speed, scale, and privacy.
New Sources and Types of Data
In the near future, companies will be able to tap into new sources of data that, until now, have been unavailable or difficult to collect. What's exciting about this is that the availability of new kinds of information will enable the subjects of our insights to change.
- Internal business processes data: ERP, SCM, and CRM systems are already helping companies see the state of their business and assets and what is happening at that exact moment, whether in the manufacturing, sales, or post-purchase phase.
- Physical world observations: The proliferation of cheaper sensors and radio frequency identification (RFID) tags will increasingly enable companies to collect information about physical environments and monitor virtually any object or business asset, including its location, condition, and usage. From machine automation to telematics and silent commerce, businesses will be able to track products and usage.
- Commercial semantics: The emergence and increasing acceptance of software applications and trading languages based on XML, known broadly as Web services, will generate standardized data for entire industries about specific products and services being traded, how they're being traded, and who's trading them.
- Personal data: As more of our personal activities contain an online component, information about individuals will become another type of data that has value for business, including a person's location, contact preferences, clothing sizes, health, genomics, biometric devices, and financial data.
Speed of Data Collection, Processing, and Analysis
The ability to access and process information faster not only enables us to execute today's applications more quickly, but also enables new classes of applications that depend on real-time insight. You may know your customer's purchase history over the last 10 years, but can you anticipate what they need in the next 10 minutes?
- Speed of collection: Data is being captured and processed in real time. The result? Trends can be spotted and reacted to immediately instead of in hindsight.
- Increased processing power: Gordon Moore's famous hypothesis regarding the exponential growth of processing power remains accurate today. Insight applications such as customer segmentation occur at an order of magnitude faster than they did five years ago. These insight processes can now be performed instantaneously or repeatedly in real time by the end user as opposed to the batch process of yesterday.
- Analysis: Technology improvements in domains such as content management and data mining have been slower than in those more influenced by hardware. However, today, data mining software is no longer just in the hands of a select business intelligence group. It is now available to the average knowledge worker, providing insight capabilities throughout an enterprise. Software improvements in machine-learning algorithms and techniques have enabled analysis tools to attack and leverage unstructured nonrelational data for increased benefit.
Scale
The sheer amount of data that will be available to companies will dwarf what businesses have today. In fact, companies will soon measure their data not in gigabytes or terabytes, but in petabytes (approximately 1,000 terabytes). Storage technologies have improved to the point that retention of this data is now cost-effective. Access to more granular data will help improve and refine current analysis techniques. For example, retailers could track product sales to the customer level by the hour as opposed to the aggregate store level by the day. Customer movement or real-time shelf inventory data could be cross-referenced and stored for future analysis.
Privacy and Trust
Individuals, business, and government will be increasingly concerned with data security, personal access, and accountability. Government will enact and enforce new legislation in the absence of action by private companies. Businesses should take the opportunity to leverage emerging insight technologies to create new services that balance benefits to consumers and businesses, building trust and increasing customer value commensurate with increased access to customer data.
For example, postal agencies could provide a permissions-based electronic change-of-address service to consumers. Consumers would benefit from increased convenience as well as the data security of dictating who gets the new address. Businesses would benefit by reducing erroneous mailings and call-center costs through automated address updates. The postal agency could generate new revenue from providing such a service through a direct subscription charge to consumers and/or businesses.
Information Insight R&D
Accenture Technology Labs is actively investigating how these four factors - new sources of data, speed, scale, and privacy - will affect a variety of industries. Researchers are testing a number of prototypes that build upon SCM, ERP, CRM, and data warehousing systems to deliver value, today and in the future. These prototypes demonstrate the potential that information insight holds to help companies dramatically improve many areas of their business, from R&D and manufacturing to transportation and marketing, and to develop entirely new capabilities that give them a competitive edge for years to come. Here are some specific areas and the potential for change.
Product Improvement
Many companies have recently invested in technology that benefits manufacturing, transportation, sales, and other areas of the supply chain. But product development was often ignored. However, that will change in the near future as emerging applications promise to transform how products are conceptualized and developed.
One such area is telematics, which is typically associated with in-vehicle consumer services. In recent years, Accenture has been investigating how companies can use telematics - specifically, embedded sensors and communications technologies - to gain better insight into how their products are used in order to improve product development and customer service. Beyond vehicles, telematics could be applied to any number of product categories, from medical devices to industrial equipment. The ability to monitor continuously, rather than at infrequent intervals, expands our ability to provide services in areas such as telemedicine, a growing field in which communications-enabled medical devices allow patients to be monitored as they go about their lives.
Product Creation
In addition to improving a product's design, new insight applications can help create entirely new products. For example, one pharmaceutical company is testing a new prototype from Accenture, called the Knowledge Discovery Tool, to help speed drug discovery. Knowledge Discovery Tool probes data repositories throughout an enterprise and on the Internet and displays information as if stored in a single, holistic database.
The tool goes beyond basic search engines by enabling users to find relevant materials and links that they never knew existed, and find them much more quickly. By targeting investigational research tasks such as drug discovery, this prototype can dramatically improve decision-making processes and significantly cut product time to market. These product development efficiencies result in shorter development cycles, which can lead to increased product profitability.
Manufacturing and Maintenance
Today, companies are only capable of tracking products at the stock keeping unit (SKU) level rather than at the individual item level. At its Silent Commerce Center, Accenture is researching how manufacturers can feed real-time product data and physical plant information into enterprise systems by embedding sensors into their products and equipment. This, in turn, enables a company to refine production plans the moment intelligence arrives to improve process timing, eliminate unwanted inventory, and correct product deficiencies on the fly. An automaker may be able to identify product defects more quickly and alter production immediately. Software companies could save development and production costs by eliminating product features that customers rarely use.
Sensor-embedded objects also can issue warnings about dangerous situations, allowing businesses to spot threats in time to act and defuse them. A company could embed sensors in equipment parts (e.g., airplane engine turbine blades, production machinery, etc.) that would detect and alert personnel to impending failures. The defective part could be fixed or replaced before it becomes an issue.
Sales and Marketing
Companies have made great strides in developing better customer insights through their adoption of CRM systems and principles. The next wave of insight technologies will help turn customer insights into genuine competitive advantage. One Accenture prototype, Sentiment Monitoring Services, is testing the hypothesis that early knowledge of consumer sentiment can help companies to respond to the market earlier and more effectively. The prototype demonstrates how companies can use the Internet to understand quickly whether its latest product is a hit or a dud, or to recognize brewing customer sentiment that threatens its brand and move quickly to minimize the damage.
It searches Internet sites, newsgroups, or incoming customer email to collect customer opinions and discern the sentiment of the text toward a certain product or company. The prototype then presents the user with a visualization of the results and an advanced intelligence report that interprets the data.
Another area that has been a major focus of recent CRM initiatives is helping companies to maximize the profitability of each customer. One emerging insight application, the Personalized Pricing Tool, can support this effort by helping companies understand an individual customer's pricing threshold for specific items and set prices accordingly. The tool can profile individual customers as they walk in the door, access their purchase history, review sales volume, and assess inventory cost to present a personalized pricing offer designed to maximize profits per person. This type of capability is conceivable because of two factors: information is now stored on individual consumer spending; and cheap processing power can be used in real time to calculate results.
Businesses could use this capability to entice customers to share additional information beyond purchase history (currently captured by loyalty cards) in exchange for additional price promotions. Customers would benefit from receiving targeted promotions instead of mass mailings; customers would also retain control over how their data is used beyond the original intent.
The biggest area of CRM work, however, involves generating insights into what customers really want and need, so that sales, marketing, and service activities can be altered accordingly. Current data-mining technologies are helpful in this regard, but still don't paint a complete picture because they focus primarily on demographics and transactions. However, a new Accenture prototype called Product Profiler uses text-mining techniques to extract data from product descriptions to understand a buyer's preferences. Using such an application, a retailer, in addition to knowing a customer's purchase history, can understand whether the customer's taste in clothing is flashy or conservative. Based on this insight, the merchant can create offers and campaigns that are more relevant to the customer's lifestyle and significantly boost the chance that he or she will buy.
Distribution
Supply chain planning and transportation management systems and collaborative forecasting and replenishment software have significantly improved the way companies move products. New insight applications will give companies unprecedented visibility into their operations and business environment. As a result, they can maximize the use of physical assets and increase customer satisfaction.
One example is the self-managing truck: Accenture's Object Information Exchange prototype can measure the volume of goods on board and alert shipping managers to excess capacity. This application can reduce the number of times a truck runs less than full and, in the process, slash transportation costs. The keys to the prototype are sensors embedded in the truck's cargo hold and Web services, which make it possible for the capacity information to be transmitted via the Internet and shared by any person within or outside the company. The truck controls who can access what data.
Another example is the Dynamic Delivery prototype. It uses GPS, intelligent agents, and components of Microsoft's .NET Web services platform to enable shipping companies to redirect packages to a recipient's current location with the individual's permission. This application could generate new revenues from services such as dynamic package rerouting, cut operating costs by reducing the number of missed deliveries, and improve customer service. The Dynamic Delivery prototype illustrates increased data access balanced with increased data control and privacy.
Preparing for the Future
Many aspects of the next wave of insight applications will be radically different from those that characterized previous waves because they leverage technologies and data types that are just now emerging. Taking advantage of these changes will require business executives to ask themselves an entirely new set of questions.
- If you could process data 10 or 100 times faster, what would you do? If bottlenecks in your business processes could be removed through increased processing power, what would the new limiting factors be? Until recently, the focus for many biotechnology companies was decoding the human genome. That task was accomplished far faster than originally predicted. As a result, genomics are providing biotech companies with greater information about how the body works. If a pharmaceutical company can use new data and increased computational power to model drug interactions 100 times faster, it may be able to bring more viable drugs to market. In this environment, a new bottleneck might be marketing and selling 10 times as many drugs or manufacturing a greater number of drugs. Imagine future business opportunities and challenges before making technology investments today. Insight technologies can be used to model and evaluate these problems as well.
- How will the availability of new data sources affect current systems? Most corporations will try to integrate new data with old systems to offset investment costs. Integrating a multitude of systems that all speak a different data language can be costly and ineffective. But technologies such as Web services will ease inter-application integration. The time and effort required for proper data transformation can easily be underestimated. Enterprises should agree upon transactional semantics at a corporate level and ensure that all new information systems use the same definitions.
- Are you ready for the privacy and trust issues related to the increased use of personal data? What legislation will affect your business? Businesses will have increasing access to personal data either directly or through relationships with business partners. For example, grocery stores today use loyalty cards to offer discounts to preferred customers. In practice, these stores are collecting enormous amounts of information on the eating habits of a wide variety of people. In theory, a grocery store could share this potentially valuable information with health insurers. Such data could be used to improve predictive models on health, or the data could be misused to inflate premiums based on the customers' food consumption. It is critical for companies to maintain trust with end users while using personal data for business benefit.
About Accenture Technology Labs
Accenture Technology Labs, the technology research and development organization within Accenture, has a 16-year track record of turning technology innovation into business results. The labs create a vision of how technology will shape the future and invent the next wave of cutting-edge business solutions. Working closely with Accenture's global network of specialists, Accenture Technology labs help clients innovate for competitive advantage. The labs are located in Chicago; Palo Alto, California; and Sophia Antipolis, France.
