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How Small Companies Can Use Big Data To Grow And Improve

Jennifer Horowitz

Small businesses can cost-effectively analyze large data sets to improve their marketing and product quality and accelerate customer relationships. Leaders from every business sector must learn how to grasp its changes for the future as Big Data becomes the key basis of competition.

Big Data is for organizations of any size, with data management having developed into an important skill to competitively differentiate today’s market leaders from those that are no longer influential. Signals and Systems’ mid-2014 report found that the Big Data market is expected to total $76 billion by 2020, an increase of 17%.

Technically, Big Data refers to technologies and initiatives that are too massive for traditional skills, technologies, and infrastructure efficiently address.

More than 70 years ago, in 1941, the first attempt to quantify the volume of data growth known as the “information explosion” was used, according to the Oxford English Dictionary.

Big Data was initially a unique resource only for large corporations and statisticians. With the growth in the Internet, smartphones, wireless networks, sensors, social media, and other digital technologies, small businesses and companies of all sizes are now able to leverage this trend.

As Big Data grows, MSPs can even connect to SMBs in offering their services as they look for new opportunities. Markets and Markets predicts that third-party MSPs cut recurring in-house costs by 30-40% and can add as much as a 60% improvement in efficiency. Small businesses face a big problem today with finding data storage, due to the increased growth and data volume of devices.

MSPs can expand their cloud services as SMBs look for bigger and better data storage alternatives. This means new growth and partnerships for MSPs that choose to expand their suite of services.

In addition to expanding storage options, MSPs can look to analytics performance and database management. By helping small businesses better evaluate their data, SMBs can provide a streamlined recovery and backup system to ensure data is not cluttered on a user’s mobile device.

Big Data leaders and laggards

A.T. Kearney, a global management consultancy firm, and Carnegie Mellon University investigated the corporate use of Big Data in its first-ever Leadership Excellence in Analytic Practices (LEAP) July/August 2014 study. They divided companies into four categories: leaders, explorers, followers, and laggards. Here’s what the leaders were doing with Big Data.

An inclusive atmosphere: This begins with a hands-on, dynamic policy of executive sponsorship and mindshare about Big Data. This fosters team-building, cross-functional collaboration, and company-wide confidence in data-driven methodologies.

The need for speed: Leaders used approaches that focused on rapid experimentation, mobilization, and deployment. This was primarily through pilot programs and proof-of-concept modeling.

Forward-thinking: These policies bred innovation, growth, and better operational efficiency. While Big Data was used for reporting on past efforts, leaders focused on future endeavors. They evaluated risks. They studied costs and benefits and balanced the tradeoffs between them. Then they charted a course.

Building on Big Data

According to the IBM Institute for Business, 26% of companies see returns from Big Data after 6 months. 63% see returns after one year. 40% reported that they use Big Data to solve their operational challenges.

The world will become more and more reliant on data-driven metrics in the years to come, and businesses need to recognize that fact. Using the power of analytics can shift a company into high gear, while failing to do so could leave them stuck in neutral.

Want more strategies to help your business tap the power of analytics? See Top Five Big Data Challenges For CIOs.

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Smart Machines Create Markets For Cyber-Physical Advances

Marion Heindenreich

Today, industrial machines are more intelligent than ever before. These intelligent machines are changing companies in many ways.

Why smart machines?

Mobile networked computers were a key breakthrough for making smart machines. Big Data allows machines and computers to store information and analyze complex patterns. Cloud computing offers broad access to information and more storage.

These computerized machines are both physical and virtual. Some call them “cyber-physical” machines. Technology lets them be self-aware and connected to each other and larger systems.

Businesses change their approaches

Intelligent machines allow companies to innovate in many areas. For one, the value proposition for customers is evolving. Businesses now model and plan in different ways in many industries.

Makers of industrial machines and parts work in new ways within the organization. Engineering now partners with mechanical, electronic, and software staff to develop new products. Manufacturing now seamlessly ties what happens on the shop floor to the customer.

Service models are changing too. Scheduled and reactionary servicing of machines is fading. Now intelligent machines track themselves. Machines detect problems and report them automatically. Major problems or failures are predicted and reported.

A data mining example

One good industrial example is mining, which can be dangerous and difficult. As ores become scarce, the costs of mining have increased.

“Smart machines” started in mining in the late 1990s. Software and hardware let remote users change settings. Operators moved hydraulic levers from a safe distance. Sensors observed performance and diagnosed issues.

Data cables connected machines to computers on the surface. Continuous and remote monitoring of the machines grew. Over time, embedded sensors helped improve monitoring, diagnostics, and data storage.

The technology means workers only go underground to fix specific issues. As a result, accident and injury risk is lower.

New wireless technology now lets mining companies connect data from many mine sites. Service centers access large amounts of data and can improve performance. Maintenance is prioritized and equipment downtime is reduced.

Opportunity abounds

For companies the time is now. Today, mobile “connected things” generate 17% of the digital universe. By 2020 that share grows to 27%.

You might not be investing in this so-called “Internet of Things” (devices that connect to each other). But it’s a good bet your competitors are. A December 2015 study reported 33% of industrial companies are investing in the Internet of Things. Another 25% are considering it.

There are risks

This new dawning era of manufacturing is exciting. But there are concerns. Cyber attacks on the Internet of Things are not new. But as the use of intelligent machines grows, the threat of cyber attacks in industry grows.

Data confidentiality and privacy are concerns. So too are software and hardware vulnerabilities. Exposure to attack lies not just in the virtual space but the physical too. Tampering with unattended machines and theft pose serious risk.

To address these threats, industries must invest in cybersecurity along with smart machines.

Conclusion

The potential advantages of smart machines are staggering. They can reshape industries and change how companies produce new products and create new markets.

For more information, please download the white paper Digital Manufacturing: Powering the Fourth Industrial Revolution.

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Marion Heindenreich

About Marion Heindenreich

Marion Heidenreich is a solution manager for the SAP Industrial Machinery and Components Business Unit who focuses on solution innovations like Product Costing on SAP HANA and cloud solutions, as well as providing financial and business analysis for industry business strategy definition and business planning.

Mining Firms Turn To Tech

Ruediger Schroedter

Gone are the days in mining when assessments of potential dig sites meant lots of waiting for results. Gone, too, is the uncertainty on a mine job about where to go next.

For mining executives, recent advances in digital technology allow companies to make decisions at a rapid pace. Decisions that used to take days and weeks now can be done in minutes and hours.

With more information available faster, mining leaders reduce both short- and long-term financial risk. Data from across the enterprise inform decisions about buying and selling assets. Profitability should increase, driven by key technology advances.

Digging in to the data

There are two key drivers to this digital revolution. The first is the rise of the Internet of Things (IoT). The IoT consists of devices that are equipped with sensors, software, and wireless capabilities. These devices are connected to each other and can detect, store, and send data.

Bonus: Click here to learn more about Digital Transformation in Mining.

The second is the rise of Big Data, mobile, and cloud computing. Today’s mobile devices can track, send, and receive data from remote sites worldwide. Cloud computing stores billions of bytes of data at low cost. Big Data analytics programs take data coming from many different locations and systems and synthesize it. Those programs then better inform decisions by offering dashboards, metrics, and predictive modeling.

Robots are able to venture into hazardous areas and move material with remote human oversight. On-site mining data is sent via mobile phone to a cloud-based platform. For mining, the convergence of these technologies provides extraordinary possibilities.

Technology at play

The potential impact is significant. A recent report by McKinsey & Co. showed the use of advanced analytics in mining and related industries had a major impact. Firms using these programs to assess production areas increased their profit margins by 2-3 percentage points.

One mining company used so-called Monte Carlo simulations to reduce certain capital expenses. Monte Carlo simulations use complex algorithms and repeated random sampling to model possible outcomes. They’re frequently used in finance, biology, and insurance. The Mining Journal reported how the company challenged assumptions about a project’s capital needs. It took historical data on certain disruptions such as rainfall patterns. Then models of its mines were made showing the impact of flooding and rainwater. The data led to a new strategy that maximized storage capacity and handling across all its mines. Capital costs dropped by 20 percent.

18 Aug 2012, South Dakota, USA --- USA, South Dakota, Lead, View of open pit --- Image by © Bryan Mullennix/Tetra Images/Corbis

Buy or sell?

With so many variables at play, mining valuation is not for the faint of heart. Integrated data streams available at the discovery stage make for better informed purchase decisions.

Software programs today can take data to build and validate exploration models. These programs use 3D visualization and validated geophysical, analytical, and drill hole data. In turn, detailed 3D topographical models are possible.

Other programs assess historical, assay, and drilling data. This information creates viable scenarios for determining whether to buy or sell a site.

These tools use data consistently from one potential site to the next, allowing for forecasting of economic risk that is consistent across the organization. The firm today can use “real options valuation” to develop models of outcomes given changing economic conditions. With clearer information about potential risks, firms can decide whether to stage, sell, abandon, expand, or buy.

Anticipating, not reacting

Mining companies realize today that these analytic platforms and dashboards offer many advantages. Users have a clearer interpretation of the aggregated and analyzed data points from multiple areas. Using predictive analytics, mining decisions are made based on smart assumptions, not past historical information.

Robust software programs can generate reports almost instantaneously. Supervisors have on-site access to the analysis through a web browser or app. This data has many uses. Drilling managers save time and can make quicker decisions on next moves. Supplies can be ordered faster. Needed data for accreditation and compliance is immediately accessible.

Selecting the right sites

One example is assay analysis. Today, geologists do not wait weeks or months for assay results. Instead of off-site analysis, web-based applications deliver information much faster to inform decisions.

Robots are sending information about field operations, safety, needed maintenance, and drilling performance.  Some devices send the information themselves. In other cases, staff use mobile phones, tablets, or laptops.  This information and analytics in turn help with site selection. Integrating data from mine planning, ventilation, safety, rock engineering, and mineral resources improves overall forecasting.

Discovery, particularly of Tier 1 sites, is an increasingly costly venture for mining companies. Demand for many products is increasing while discovery rates are dropping. Mined product is of a lesser quality, particularly in mature mining locations. Many possible sites are in areas that are underexplored areas with difficult and deep cover.

The advanced technologies available today are contributing to rapid improvement in these discovery issues.

Prospective drilling

Consider the drill hole. To reduce costs in exploration, there needs to be enough rich information from the opening drill hole. It needs to be delivered in as close to real time as possible. Doing so lessens the risk of the second drill hole. Better information from the start helps improve vectoring. It provides better information about what mineral systems are being drilled.

This approach, called prospective drilling, is becoming increasingly used in mining. It employs drilling activity to map covered mineral systems. In turn, geochemical and geophysical vectoring can lead firms toward deposits.

Australia has invested heavily in this area. The Deep Exploration Technologies Cooperative Research Centre (DET CRC) has a singular vision: uncovering the future. Its core purpose is “develop transformational technologies for successful mineral exploration through deep, barren cover rocks.”

To get to that point, the DET CRC is borrowing a drilling technique from the oil business. Coiled tubing is paired with downhole and top-of-the-hole sensors. The informaton provides petrophysical, structural, rock fabric, geochemical, and mineralogical data all at once.

Conclusion

To meet increasing demands for new viable sites, and to improve efficient on sites, mining is changing. Using smart, connected products and robust data modeling, mining is being done faster, safer, and more efficiently than ever.

Join a LiveTwitterChat on digitalization in mining on May 4th from 10-11 a.m. EST: #digitalmining

The global mining and metals industry will come together to discuss how digital innovation is impacting the mining industry July 12-14 at the International SAP Conference for Mining and Metals in Frankfurt, Germany.  Don’t miss this opportunity to meet with world leaders and learn how your organization can become a connected digital enterprise.

Follow speakers and pre-event activities by following sapmmconf and @sapmillmining on Twitter

AA Mining and Metals Forum

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Ruediger Schroedter

About Ruediger Schroedter

Ruediger Schroedter is responsible for solution management of SAP solutions for the mining industry worldwide. He has spent more than 15 years in the mill products and mining industries and has extensive experience implementing SAP solutions for customers in these industries before coming to SAP.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

Fawn Fitter is a freelance writer specializing in business and technology. 

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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Global Expansion Essentials: Survival Skills Every CFO Should Know

Arlen Shenkman

Every business wants to grow revenue. And the next logical step when you’ve conquered local markets is to consider global expansion. Right? Maybe not. Not every business has the wherewithal to successfully operate a business halfway around the world.  How can you be sure of success?

In this post, I’ll share lessons learned in my experiences with companies both large and small as they’ve pursued international expansion. This topic is a natural extension of my previous blog posts on building, buying, and partnering to achieve growth.

Exporting the brand

The world is a big, complicated place. As CFOs, our role is to help determine if the business can successfully make the investments required to operate in another country. Corporations that expand globally without having a full perspective of the impact of their brand in other countries and on the public’s perception of their products and services may have a tough road to travel. Think about Google. In the United States, Google is perceived as a beloved brand in many respects. But in Europe, it’s viewed in a less favorable light because of privacy concerns.

Beyond branding, companies need to consider the impact of expansion on the company’s culture, its business model, and its pricing. All of these variables become relevant because the business will no longer be operating in a homogeneous environment.

Safeguarding stakeholders’ interests

There are risks and rewards associated with every business decision. The potential risks are much greater when pursuing global markets. CFOs are expected to mitigate these risks and ensure that the business is getting the right return on investment. This means taking the right steps to ensure that your stakeholders’ best interests are being served by an expansion. These steps begin with a fundamental premise: that the business must maintain control once it’s become a global operation. Much of that control depends on the back office and the IT infrastructure. Having this foundation helps to ensure that the business is maintaining compliance with everything from regulatory reporting to taxes to government relations, which minimizes risk and helps protect your company’s interests.

Fundamentally, there’s a tradeoff between leveraging established, proven people, assets, and brand versus duplication of some or all of these elements or functions to allow for local tailoring. The former creates the potential for much more profitable expansion through economies of scale and may provide the most oversight and control. But a one-size-fits-all approach won’t work in all markets, and this approach does carry great risk. There is no right or wrong answer. Indeed, many global companies will employ all strategies in parallel, or may look to partners to gain necessary local knowledge.

Standardizing to simplify

It makes sense to expand in manageable stages and begin with expansion in culturally or geographically close countries. Recognize that it will take capital and management bandwidth and that the expansion needs to be judged against domestic expansion opportunities through new products or sub-markets.

In a previous company where I worked, we expanded internationally through acquisition. We then let the businesses run standalone. There was very little process or control around our operations. Essentially, the business was comprised of an independent set of companies that operated under one common brand. This is one model for international growth, but it can raise compliance and control issues. Case in point, this company had a serious financial restatement that resulted in a shareholder lawsuit.

At SAP, we tend to buy companies that are regional and then globalize them. We do this by integrating the operations of the business on a common IT infrastructure and use shared service centers around the world. The businesses are able to maintain their brand and some of their own independence, but we gain greater efficiency, transparency, and control. This makes it easier to achieve compliance in the 190 countries where we do business. Imagine the complexity of this task if every business were running independently.

Running efficient operations to get it right from the start

It would be shortsighted in today’s digital world to not have a common IT platform that allows you to extend operational efficiency and transparency globally, standardizing processes, practices, and controls across the business. Technology is faster, cheaper, and better than ever. Consolidating on a common platform before expanding mitigates the effort involved in integrating disparate systems and supports a unified expansion strategy.

It also frees you to perform the kind of due diligence involved with global expansion in the first place. A common platform allows you to automate financial tasks so you can focus your time and energy on being a strategic adviser to the business that enables transformation and growth.

To continue the discussion on the pivotal role finance will play in leading growth and operational efficiency, read the Forrester report Digital and Automation Enable Finance Operations Efficiency.

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Arlen Shenkman

About Arlen Shenkman

Arlen Shenkman is the CFO for SAP North America, overseeing the financial activities of Canada and the United States, including forecasting and planning, driving efficiencies, and ensuring the overall financial health of the region.