Data deluge creating a revolution in enterprise decision making

MIT business expert argues that data can provide improvements in profitability and productivity

LAS VEGAS: The deluge of data being produced by new technologies and the tools to mine this data are creating unheard of opportunities to businesses, according to a leading academic at the Massachusetts Institute of Technology (MIT).

Speaking at the SAS Global Forum event Erik Brynjolfsson, director of the MIT Center for Digital Business, said this new era of IT is driving the biggest change in businesses practices ever seen, and had, in part, been helped by the recession.

"Every time a new technology is introduced, from the assembly line to electricity, it drives a set of changes within businesses. The successful ones are those that figure out the complementary fit of these technologies to their business," he said.

"The recessions forced businesses to think differently and this has helped to provide improved business performance, which in turn is improving productivity because of the ways in which companies are using IT."

However, while IT had been at the heart of this change, merely implementing systems is not a guarantee of success as they must sit alongside the right processes and culture within organisations, Brynjolfsson explained.

Soon to be released research by MIT on 330 companies found that those that use data to help improve decision making saw a four per cent increase in productivity over those that do not.

Profitability and market value increased by six per cent but, while IT systems are becoming more ubiquitous and easy to use, there is a growing gulf between those companies using technology successfully and those that are not.

"At the moment a lot of companies don't know what they're doing so we've reached a stage where the leaders in IT innovation are continually pulling away from the rest, even though the technology in use is becoming increasingly common," Brynjolfsson said.

Data deluge creating a revolution in enterprise decision making

MIT business expert argues that data can provide improvements in profitability and productivity

Brynjolfsson urged businesses to adhere to four key principles that could help deliver huge benefits when using technology to become a leader in this area rather than a laggard.

The first is measurement, by which businesses need to use the wealth of technology like click streams, RFID, geo-location, social media and others to gain data that was previously impossible to measure.

"We are on the cusp of a revolution in measurement for management and decision making, with the ability to measure fine grain information on what's happening with customers, suppliers and employees, offering a vast improvement," he said.

Secondly, experimentation is crucial to compare different techniques based on data. Brynjolfsson explained that Amazon frequently changes the location of its shopping basket for different customers to see which leads to most completed sales.

If this experimentation and measurement leads to clear improvements, it is vital for firms to share this across their organisation and drive the changes in all locations.

This leads to Brynjolfsson's fourth principle: replication. Executives charged with IT decision making must look beyond IT alone and foster a culture of innovation and incentives that drives genuine businesses benefits.