_Futurization
Author: Astrid Blechschmidt, Partner Travel, Transport & Logistics at WAVESTONE
There is no one-size-fits-all solution to the challenges businesses face. But embracing a more data-driven overall approach is a sure way for companies to secure long-term competitive advantages and step confidently into a future where data will be part of every decision, every interaction, and every process.
Why data is a critical success factor
It is getting harder and harder for companies to differentiate themselves through their physical products. Increasingly similar products and accelerating product cycles are forcing companies to develop digital services alongside their actual products and to use them to build customer loyalty. One example is to create pay-per-use or predictive maintenance services for cars and compressors. This will not only allow companies to strengthen customer loyalty, but also to develop new business models that in turn drive new revenues and business success. New business models and digital services are both predicated on data – whether it is data about customer behavior or about a certain process. Companies that dominate and control the world of data gain a massive advantage over their competitors.
Companies have long started to embrace – and collect – data as a gateway to a successful future. But even though many may have laid the groundwork, there still is a lot of potential to be unlocked. Data alone does not make for a competitive edge – no matter how much data you have. Rather than amassing huge amounts of data, putting a lot of effort into anonymizing them, and having algorithms sift through them, companies should focus on leveraging smaller amounts of high-quality data to derive valuable insights and put them to good use. They need to move from big data to smart data.
What is the current data situation for most companies and what do they need to change
The vast majority of companies is still taking more of a transactional approach to data, as they have for the past ten years. Those that have made the transition from understanding data to deriving tangible business value from it are few and far between. In other words: the expertise to make the most of the data you have is an often neglected but crucial factor. This creates the very real risk for companies to be surpassed by others – mainly digital players – or pushed from the market altogether. In my view, one of the biggest obstacles to becoming a more data-driven company is the fact that many organizations with their outdated systems, data environments, processes and mindsets are caught up in a legacy trap. Modernizing legacy application landscapes on the path to a data-driven culture can be a very costly endeavor. In some cases there is only one way out: take a greenfield approach and start over technologically, for example by implementing a new data science infrastructure with data science workbenches for data scientists and developers.
„Data alone does not make for a competitive edge – no matter how much data you have. The expertise to make the most of the data you have is an often neglected but crucial factor.“
Astrid Blechschmidt, Partner Travel, Transport and Logistics
Establish an enterprise-wide data strategy
Modern technology and a state-of-the-art IT infrastructure alone do not make for a data-driven company. The key is to improve data skills and literacy, which in turn relies on an enterprise-wide data strategy. It sets the foundation for the right mindset and helps break down silos as quickly as possible. Because if every department is an island that collects its own data, worst case is that you may just end up with inconsistent or even contradicting results. It will also be crucial for businesses and individuals to make massive strides in learning which information they can trust and how to validate their data. This is yet another discipline, let’s call it “data trustification”, that companies need to consider.
Invest in the recruitment of data scientists
Enterprise-wide data literacy means companies have to invest in data skills training. But there is another catch: big players like Google are much more likely to attract data talent than more traditional companies. This needs to change, which is why companies should start investing in employer branding in this regard. After all, how do you expect to become a data-driven organization without having the right people work for you. Companies need technology experts that can navigate the noise of the many technologies and interrelationships at play and implement a strategic solution architecture on top of them.
Use explainable artificial intelligence to drive new ideas
What’s more, many management teams have yet to learn how to develop new data-driven business models. Innovations in this field are often beyond their scope of expertise until some other company brings this very type of innovation to the market, disrupting it in the process. This is another area where enterprise-wide data literacy is the way ahead for businesses. Explainable artificial intelligence can help them achieve it. Decision makers in particular need to deeply understand how AI works to build confidence in the technology that permeates throughout the organization. Only then can companies truly innovate in this field, that is, create new business models that deliver on their promise.
Foster a new data culture
Better understanding data also means evolving your data mindset. This may lead a company to fundamentally rethink its attitude towards an open source policy with competitors from unimaginable to necessary. Because in order to learn from the sheer volume of data available, it will become increasingly important going forward to embrace the spirit of open source across company lines. When dealing with data, companies should no longer view data as an asset that needs to be kept exclusive to their organization, but rather as one that can deliver added value when shared. If, for example, all insurers were to share their claims data, the claims algorithm would be much better able to recognize patterns and calculate probabilities even more precisely – for example to determine whether the photographed damage matches the described cause. This is good for everyone’s bottom line.
Prepare for the data world of the future
The aspects outlined above enable companies to develop new digital services and business models, but, even more importantly, they also put them on a path to becoming fully data-driven companies. Because going forward data will play a dominating role in every single decision, in every interaction, and in every process. In the years ahead, we will see vast networks of connected devices transmit data and insights in real time, powered by new and ubiquitous technologies like Kappa and Lambda architectures for real-time analytics. Every company will be able to support even the most sophisticated analytics use cases as cloud computing is becoming even more affordable and ever more powerful in-memory data tools are being put in their hands. And then there is the combination of increasingly flexible data storage and advances in real-time technologies and architectures that will make it easier for companies to develop “customer 360” data platforms and digital twins. This in turn opens the door to elaborate simulations and what-if scenarios.
Data assets will no longer be siloed, but rather organized as products, regardless of whether they will be used inside the company or by outside customers. These data products will be the responsibility of specialized teams that will be tasked with baking in data security, evolving data technologies, and implementing self-service access and analytics tools. They will oversee the ongoing and flexible development of these data products to always keep pace with customer demands. Overall, these products will deliver data solutions that can be used more easily and repeatedly to overcome different business challenges and to reduce the time and cost of deploying new AI-powered features.
Astrid Blechschmidt
Partner Travel, Transport & Logistics at WAVESTONE
Astrid Blechschmidt is responsible for the Travel, Transport & Logistics division at WAVESTONE. With 20 years of experience, the rail and logistics expert supports companies from the transport and logistics industry in the digitalisation of their core processes and the use of data for the development and expansion of new business models. Astrid Blechschmidt is convinced that data-driven decisions, especially when building new services, help to inspire customers and address their real needs.
