The Dawning of the Predictive Business Era

A momentous shift in business strategy is taking place. Big Data, cloud computing and mobility, in tandem, are having an enormous impact on how businesses must act — and react — across their markets.

The agility goal of real-time responses is no longer good enough. What’s apparent across more business ecosystems is that businesses must do even better, to become so data-driven that they extend their knowledge and ability to react well into the future. In other words, we’re now all entering the era of the predictive business.

In this podcast, Tim Minahan, the chief marketing officer for SAP Cloud, and moderator Dana Gardner, principal analyst at Interarbor Solutions, discuss how heightened competition amid a data revolution requires businesses and IT leaders to adjust their thinking to anticipate the next, and the next, and the next moves on their respective chess boards.

Listen to the podcast (26:05 minutes).

Here are some excerpts:

Dana Gardner: It’s hard to believe that the pace of business agility continues to accelerate. Tim, what’s driving this time-crunch? What are some of the changes afoot that require this need for — and also enabling the capabilities to deliver on — this notion of predictive business? We’re in some sort of a rapid cycle of cause and effect, and it’s rather complicated.

Tim Minahan: This is certainly not your father’s business environment. Big is no longer a guarantee to success. If you just look at the past 10 years, 40 percent of the Fortune 500 was replaced. So the business techniques and principles that worked 10, five or even three years ago are no longer relevant. In fact, they may be a detriment to your business.

Just ask companies like Tower Records, Borders Bookstore, or any of the dozens more Goliaths that were unable or unwilling to adapt to this new empowered customer or to adapt new business models that threatened long held market structures and beliefs.

The world, as you just said, is changing so unbelievably fast that the only constant is change. And to survive, businesses must constantly innovate and adapt. Just think about it. The customer today is now more connected and more empowered and more demanding.

You have 1 billion people in social networks that are talking about your brand. In fact, I was just reading a recent study that showed Fortune 100 companies were mentioned on social channels like Facebook, Twitter and LinkedIn a total of 10.5 million times in one month. These comments are really shaping your brand image. They’re influencing your customer’s views and buying decisions, and really empowering that next competitor.

But the consumer, as you know, is also mobile. There are more than 15 billion mobile devices, which is scary. There are twice as many smartphones and tablets in use than there are people on the planet. It’s changing how we share information, how we shop, and the levels of service that customers expect today.

It’s also created, as you stated, a heck of a lot of data. More data was created in the last 18 months than had been created since the dawn of mankind. That’s a frightening fact, and the amount of data on your company, on your consumer preferences, on buying trends, and on you will double again in the next 18 months.

The consumer is also changing. We’re seeing an emerging middle class of 5 billion consumers sprouting up in emerging markets around the world. Guess what? They’re all unwired and connected in a mobile environment.

What’s challenging for your business is that you have a whole new class of Millennials entering the workforce. In fact, by next year, nearly half of the workforce will have been born after 1980 — making me feel old. These workers just grew up with the Web. They are constantly mobile.These are workers that shun traditional business structures of command-and-control. They feel that information should be free. They want to collaborate with each other, with their peers and partners, and even competitors. And this is uncomfortable for many businesses.

For this always-on, always-changing world, as you said, real time just isn’t enough anymore. Knowing in real time that your manufacturing plant went down and you won’t be able to make the holiday shipping season — it’s just knowing that far too late. Or knowing that your top customer just defected to your chief competitor in real time is knowing that far too late. Even learning that your new SVP of sales, who looks so great on paper, is an awful fit with your corporate culture or your go-to-market strategy is just knowing that far too late.

But to your point, what disrupts can also be the new advantage. So technology, cloud, social, Big Data and mobile are all changing the face of business. The need is to exploit them and not to be disrupted by them.

Gardner: How does a predictive business create a whole greater than the sum of the parts when we think about this total shift going on?

Minahan: I want to be clear here that the predictive business isn’t just about advanced analytics. It’s not just about Big Data. That’s certainly a part of it, but just knowing something is going to happen, just knowing about a market opportunity or a pending risk just isn’t enough.

You have to have that capacity and insight to assess a myriad of scenarios to detect the right course of action, and then have the agility in your business processes, your organizational structures, and your systems to be able to adapt to capitalize on these changes.

Too often, we get enamored with the technology side of the story, but the biggest change that’s going to occur in business is going to be the culture change. There’s the need to adapt to this new Millennial workforce and this new empowered customer, and the need to reach this new emerging middle-class around the world.

In today’s fast-paced business world, companies really need to be able to predict the future with confidence, assess the right response, and then have the agility organizationally and systems-wise to quickly adapt their business processes to capitalize on these market dynamics and stay ahead of the competition.

They need to be able to harness the insights of disruptive technologies of our day — technologies like social, business networks, mobility, and cloud — to become this predictive business.

Dana Gardner

Dana Gardner is president and principal analyst at Interarbor Solutions, which tracks trends, delivers forecasts and interprets the competitive landscape of enterprise applications and software infrastructure markets for clients. He also produces BriefingsDirect sponsored podcasts. [Disclosure: SAP Cloud is a sponsor of BriefingsDirect podcasts.]Follow Dana Gardner on Twitter.

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