Digital data opportunities

22 Februarie 2012

ERNST & YOUNG S.R.L.

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Adresa
Strada Dr. Felix Iacob, Nr. 63-69
Cladirea Premium Plaza, Etaj 15
011033 Bucuresti, Sector 1

Telefon
+40-21-402.40.00

Fax
+40-21-310.71.93

Website
www.ey.com

Executive summary

The last few decades have seen a technological revolution that has dramatically changed the way we live and work. Many of the physical objects and services that we interact with daily have become digital — from music and films to Internet-based banking and shopping. In addition, social media sites enable us to interact with friends, family, and businesses in new ways, all of which leave a data trail which is visible to companies that provide these services.

This proliferation of digital products and services results in consumers generating huge volumes of personal data across all aspects of their lives, which is captured by organisations through digital channels or devices. Data about a person’s friendshipnetworks, hobbies and interests is captured on Facebook, while details of their shopping patterns are captured by online retailers. In addition to these relatively established data sources, technological developments will continue to generate new sources of consumer data that could offer unique insights into consumer behaviour. In the first section we look in detail at the huge range of digital data sources.

The challenge for businesses lies in how to harness, make sense of, and use this information to generate some form of competitive advantage. Ernst & Young believes that businesses that can access these new sources of data, analyse them and convert them into insight on consumer behaviour, will be able to make their products and services more relevant to their customers. By doing this, they can deliver bottom-line improvements to their business.

Ernst & Young believes that to maximise the potential of digital data businesses need a clear strategy across four key stages to turn data into business benefit:

• Identify and capture potential data opportunities
• Generate insight from data
• Use insight to improve relevance of products and services
• Realise the business benefits

Each of these steps brings its own challenges, and each must be seen within the context of the company’s business model. Companies need to ask the question: “Does our digital data support our business model?” In the second section, we look at how companies are gaining business value from two key sources of digital data: social media and real-time location data.

However, Ernst & Young also believes businesses need to play by the rules of the new world of digital data. The third section explores how businesses have to strike a balance between making the most of their customer data to generate value, whilst ensuring that they don’t scare customers away or tarnish their own reputation by taking this too far and invading customer privacy.

The businesses that manage to strike this balance, while having a clear vision of how these new sources of data can transform their business, will be able to pull ahead of their rivals in making the most of the huge opportunities offered by digital data.

The growth of digital customer data

Digitisation of products and services is creating a swell of customer data

The last few decades have seen a technological revolution that has dramatically changed the way in which we live and work. Many of the physical objects and services that we interact with daily have become digital. As consumers, our music, images, films and shopping receipts now exist as digital data, and nearly all services that previously relied on high street stores or large call centres, such as banking, travel booking, or home utilities have become Internet-based. In addition, new digital services have been created that enable us to interact with friends, family, and businesses in new ways, all of which leave a data trail which is visible to companies that provide these services.

Consumers are now networking digitally with their friends and colleagues through social media sites. Twitter sees 600 posts per second across its 190 million users, and on Facebook there are 60 million status updates per day, resulting in 7.8 billion opportunities for users to see each comment⁽¹⁾. More recently, with the proliferation of smartphones and tablet computers, there are an estimated 20 million mobile Internet users in the UK⁽²⁾ who can access all of these services and files on the move.

By analysing these burgeoning data sources, businesses can gain new levels of insight into consumer behaviour.