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The obstacles and opportunities for mid-size firms in Europe

Executive Summary

The Challenge To The Mid-Market

A silent storm is surging across a landscape of legacy IT systems, outdated information management processes and rigid inter-departmental data silos; tearing them apart. This storm is called big data. Across Europe, mid-market firms are struggling to cope, overwhelmed by the volume and variety of information impacting the business. What can they do to meet the challenge and why is it so important that they do?

Earlier this year we set out to discover how mid-market firms in Europe feel about big data. We wanted to understand their hopes and concerns, and to gain an insight into the practical, everyday realities mid-market IT departments are facing when it comes to managing big data. We spoke to 760 front line information managers in different departments and business sectors in the UK, France, Germany, Hungary, the Netherlands and Spain.

A broadly consistent picture emerged of well-informed companies eager to embrace the potential of big data across the business; but hampered by under-resourced IT departments and looking for outside help to cope with the rapidly increasing volume of information.

  • IT departments across Europe are being pushed to the brink by information. They are struggling with a surge in data volume and variety at a time when budgets are being cut, headcount is being reduced and targets are being increased. Other challenges include a loss of control over the IT budget and a shortage of data science skills.
  • There is a chasm between companies’ understanding of big data and their ability to harness it for business benefit. Half of European businesses have no idea how to make the most of big data and 21 per cent say they won’t even try.
  • A small but significant 10 per cent of respondents say that senior executives do not believe big data is an issue, a figure that rises to 21 per cent in the manufacturing sector.
  • This lack of action is not down to ignorance about big data; but rather the fact that most firms are still very much at the start of their big data journey. Companies are focused mainly on the challenge of data volume (used to define big data by 54 per cent of respondents) and flow (nominated by 45 per cent.) Traditional interdepartmental boundaries and fragmented responsibilities are also hampering the effective use of big data.
  • There is clear evidence that job roles and responsibilities are evolving to reflect the impact of big data – with greater change to come. Around a third (38 per cent) of respondents believe big data is making their role significantly more important to the business and nearly three quarters (71 per cent) of all respondents believe that big data will have a greater impact on their role over the next three years.
  • Just over half (51 per cent) of all businesses surveyed say that although they have not yet started to change the way they manage information in response to the challenges raised by big data, it is becoming more pressing to do so.
  • Mid-market firms understand the many potential benefits of big data – and around a quarter of firms are already using big data to achieve some of these goals. Companies believe that most business areas, in most sectors, stand to benefit from the effective management of big data, with the biggest winners considered to be customer-centric, data- and process- intensive and research & development-based organisations.

Based on these findings and a number of supporting business conversations we defined the main obstacles and opportunities facing mid-size organisations looking to harness and use big data. We looked at a couple of industry examples. For example, manufacturing is one of the sectors with most to gain from big data, yet our findings support those of other studies that manufacturing appears to be among those sectors most resistant to big data adoption.

The challenge of big data is not one that can, or should, be solved in one day. Everything is evolving at such a pace that what is right for a business today, could be wrong tomorrow.

We believe that the place to begin is with a robust, yet flexible information management framework. One that acknowledges the realities and constraints faced by a European mid-market firm and provides practical steps a company can implement and build on as the full impact of big data becomes clear.

Our reality checklist highlights the importance of building the company’s big data strategy around its business goals and making the information challenge manageable by segmenting and prioritising data. It recommends that firms establish resilient, legally compliant and scalable information handling processes that facilitate transparency and accountability, protect their most important data using a reliable, long term storage medium such as tape, and ensures they can extract and act on the insight delivered by all that data.

We spoke to 760 front line information managers in different departments and business sectors in the UK, France, Germany, Hungary, the Netherlands and Spain.

The Big Picture On Big Data

In February 2011, an industry analyst at Gartner typed the words ‘big data’ into an online search engine. The search returned 2.9 million results. When he tried again in 2012, the search returned 22 million results. There is an awful lot of data about big data.

Companies trying to understand what it is all about and what big data really means for day-to-day operations are often left trying to navigate their way through the hundreds if not thousands of reports and articles available, or just trying to tackle each day as it happens.

The standard definition of big data is ‘datasets whose size is beyond the capacity of typical database software tools to capture, store, manage and analyse

The standard definition of big data is ‘datasets whose size is beyond the capacity of typical database software tools to capture, store, manage and analyse.’ However, there is a growing appreciation that big data is about more than just volume; it is about the ever-increasing velocity of data, the growing variety of data (including both structured and unstructured forms such as emails and social media messaging), its veracity (how reliable and ‘clean’ the data is) and its value.

Companies tend to progress through this list as their ability to harness and use big data becomes more sophisticated. Our study confirms that most mid-sized firms are still very much at the start of this journey – and are looking for help to address the challenge of volume and move on to the next stage.

Why Is It So Important that Firms Get To Grips With Big Data?

According to Gartner worldwide information volume is growing annually by 59 per cent. Every day, we create 2.5 quintillion bytes of data (2.5 followed by 18 zeros), and 90 per cent of the data in the world today was created in the last two years. This data comes from everywhere: sensors used to gather climate or electricity meter information, digital pictures and videos, e- and m-commerce transactions, and mobile phone GPS signals, to name but a few.

Social media is in the vanguard of this trend. The world creates around 12 terabytes worth of tweets every day (in seconds a terabyte is equal to 32,000 years). Consumer brands need to know how to collect, analyse and harness the insight from this for better customer awareness and service.

Real-time data access and analysis is becoming the norm. Financial payment firms need to know how to scrutinise the millions of transactions taking place simultaneously in order to spot and intercept potential fraud. The police need to be able to monitor the output of hundreds of surveillance cameras in order to identify points of imminent unrest.

These are just a few examples; in today’s fast moving and competitive business environment, big data offers mid-sized firms across all sectors an opportunity to find new insights, improve customer relations and supply chain management, make the business more agile and responsive and answer questions that could previously have been beyond its reach. The financial returns could be phenomenal.

The Centre for Economic and Business Research expects the value of big data to be worth £40.7 billion a year to the UK by 2017; with some of the largest gains expected in the manufacturing (from £6 billion today to £45 billion by 2017), retail (£3.4 billion to £32.4 billion) and professional services (£3 billion to £27.6 billion) sectors. These gains will come from areas such as improved customer intelligence, supply chain management, product innovation and fraud prevention.

According to McKinsey, the use of big data in retailing could generate a 60 per cent boost in net margin, with a 0.5 to 1 per cent annual productivity growth. In the manufacturing sector it could lead to a 50 per cent reduction in product development assembly costs.

In short, big data also comes with some pretty big numbers. Yet for many mid-market firms without endless resources or expertise, the truth is that today big data is more of a hindrance than a help.

Iron Mountain believes that it is time for a reality check on big data. Gartner’s ‘Hype Cycle’ of emerging technologies puts the mainstream productivity gains from big data around three years away. Our research suggests that is about right for the mid-market – but they need help to get there.

The Everyday Terror Of Terabytes

Our research among mid-sized firms confirms that IT departments across Europe are struggling with a surge in data volume and variety at a time when budgets are being cut, headcount is being reduced and targets are being increased.

Half (52%) of European businesses have no idea how to make the most of big data and 21% have no plans to try.

The practical day-to-day demands of dealing with the data deluge include:

  • Information volumes and formats becoming unwieldy, using up valuable disc space and bandwidth and causing IT systems to slow down. Data-intensive formats such as video or image files forming part of mountains of structured and unstructured data – all coming from a wider range of devices (resulting in data duplication), are proving near impossible for over-stretched IT teams to handle. Costs are soaring and more resource and additional expertise are needed to manage and make the most of this data as demanded by the rest of the business.
  • An urgent need for increased bandwidth to access and move all this data. More ‘pipe’ costs money and can further congest and slow down IT systems. Even when data is stored in the cloud to address the storage and universal access challenge, the need to up- and download data can slow down the service and affect productivity.
  • More complex and time-consuming data back-up and storage needs. For example, there may simply not be enough time to complete a comprehensive data back-up outside office hours (such as overnight).
  • This results in significant business continuity risks. Should a crisis occur where data is lost or damaged, it will take considerably longer to restore information and get the company back up to full speed.

IT departments in medium-sized firms also face other challenges that have repercussions for the management of big data. The most notable of these is a growing loss of control over the IT budget.

According to Gartner, five years from now the Chief Marketing Officer will spend more on IT than the CIO; and by 2015 around 35 per cent of the IT budget will be controlled by departments other than IT. A recent global study by the Economist Intelligence Unit revealed that for nearly half (48 per cent) of the companies surveyed someone other than the CIO now drives the firm’s big data processes.

Not all big data will come from outside the business. With the number of business users with two or more mobile devices expected to grow more than three-fold over the next four years – to 27 per cent from 8 per cent in 2011, and data-intensive desktop video conferencing to surge by 43 per cent, organisations across all sectors face considerable challenges in managing their own day-to-day information load.

The Challenge Of Departmental Boundaries And Fragmented Responsibilities

Big data is challenging traditional departmental boundaries. To effectively collect, analyse and draw insight from big data companies need to break down information silos, and the organisation must learn how to communicate and share results across the business. This requires changes in employee behaviour and culture as well as process – and change can be painful.

Furthermore, the mid-market trend for information management – and thereby big data – to be the responsibility of different individuals, including records managers, heads of department and IT, for example, could mean no one has overall insight or authority.

The C-suite has a vital role to play in both these areas: setting and communicating company culture, and unifying and integrating big data across departmental responsibilities. So it is worrying to see from our research that in 10 per cent of firms senior executives do not believe big data is an issue. This is supported by a global CapGemini study which found that as many as 55 per cent of companies feel big data management is not viewed strategically at senior levels of their organisation. It is vital that this is addressed as a matter of urgency.

A small but significant 10% of firms say senior executives do not believe big data is an issue, a figure that rises to 21% in the manufacturing sector.

The C-suite has a vital role to play in both these areas: setting and communicating company culture, and unifying and integrating big data across departmental responsibilities. So it is worrying to see from our research that in 10 per cent of firms senior executives do not believe big data is an issue. This is supported by a global CapGemini study which found that as many as 55 per cent of companies feel big data management is not viewed strategically at senior levels of their organisation. It is vital that this is addressed as a matter of urgency.

Business Without Boundaries

There is significant enthusiasm for using big data in customer relationship management (26% are already using it and a further 59% plan to)

Companies believe that most business areas, in most sectors, stand to benefit from the effective management of big data, with the biggest winners considered to be customer-centric, data- and process- intensive and research & development-based organisations.

This is reflected in companies’ own aims for big data use and implementation:

  1. There is significant enthusiasm for using big data in customer-relationship management (26 per cent are already using it and a further 59 per cent plan to)
  2. To support better decision-making (35 per cent already use it and a further 45 plan to)
  3. To support marketing campaigns and strategies (27 per cent already use and a further 48 per cent plan to)
  4. To support operations and supply chains (26 per cent already use and 56 per cent plan to)
  5. To help in quality control procedures (28 per cent already use and 47 per cent plan to)
  6. To assist in audit/compliance and other legal processes (26 already use and 48 per cent plan to), and
  7. To better manage risk (28 per cent already do and 56 per cent plan to)

Perceived internal benefits of big data include greater understanding of customer segments in marketing (52% of firms), improved services and systems in IT (49%), enhanced problem resolution in customer service (53%) and an ability to respond faster and more effectively to legal challenges (61%).

Industry Scenarios

Financial And Professional Services

The financial and professional services sectors are being transformed by mobile technology. The camera capability of smartphones is leading to the widespread launch of new applications such as ‘remote deposit capture’ – where users can take photographs of cheques and submit them straight into their bank account or complete insurance claims forms on the move accompanied by an image of the incident. With the average smartphone image now several megabytes in size, and customer numbers running into thousands if not millions for some institutions, the potential impact of such data-intensive communications on over-stretched IT systems is clear.

Manufacturing

The results reveal a massive contradiction in the way mid-market manufacturing firms feel about and use big data.

For example, we found that 25 per cent of respondents from the manufacturing sector believe big data has had no impact on their role to date, or are unsure about how it could impact them, compared to a European average of just 12 per cent. Also, 21 per cent have no idea how it will affect their role in the future, double the European average of 11 per cent. A worrying 21 per cent say senior executives do not regard big data as an issue for the business, again double the average.

More than a quarter (27 per cent) of the manufacturing firms that do not plan to make use of big data say that this is because they do not believe it will have a significant impact on their organisation.

These findings are reflected in the CapGemini study where nearly two thirds of manufacturing firms believe big data is not viewed strategically at senior levels of their organisation, and around three quarters believe there is not enough of a ‘big data culture’ in their organisation.

Yet our study also found that manufacturing sector is leading the way in terms of the use of big data to support operations, production and supply chains (38 per cent, compared to a European sector average of 26 per cent), and to help with quality control procedures (34 per cent, compared to 28 per cent.)

It is extremely important that these two conflicting pictures are better understood and their underlying causes addressed. According to the Centre for Economic and Business Research, manufacturing is one of the sectors most likely to benefit from big data, with gains of £6 billion expected in 2012, rising to £45 billion by 2017 – and that’s just for the UK.

Reality Check

One in four firms is already making use of big data, but most mid-market companies (including 41% of our respondents) don’t know how to achieve any of the benefits – and are looking around for help.

Going To Work On Big Data

The challenge of big data is not one that can, or should, be solved in one day. Everything is evolving at such a pace that what is right for your business today, could be wrong tomorrow.

We believe that the place to begin is with a robust, yet flexible information management framework. This will provide the structure the company can build on and adapt as the full impact of big data becomes clear:

  1. Start At The End
    Define the business goals and objectives and build your big data strategy around it.
  2. Shrink The Problem
    Make the challenge manageable. Everything is changing so rapidly that trying to find the perfect solution that addresses every eventuality is impossible. Decide on the information of greatest potential or risk to your business and focus your time and resources on harnessing that.
  3. Get To Grips With Incoming Data
    Prioritise data coming in, understand what you need to keep and simply delete the rest. Big data can be messy; so don’t waste too much time cleaning everything that comes in – again focus on what you want to keep.
  4. Have A Plan For What's Left
    Segment data by date, for example; anything older than a particular date can be archived on back-up tapes in a secure archive. Dispensing with junk mail alone could free up between 30 and 40 per cent of the data space on your servers. Tape remains the best medium for long term data storage: more environment-friendly and cost-effective than disk and more reliable and secure than the cloud.
  5. Establish company-wide, scalable, big-data-resilient information management systems
    This will help you to channel, analyse or archive unstructured digital content such as emails and social media.
  6. Know Your Legal Obligations
    In technology, law always lags behind practice and in the big data world it is particularly important to understand emerging data protection and privacy law around social media, real-time consumer data and location-based information.
  7. Avoid analysis paralysis
    Big data informs and enhances judgement and intuition, it should not replace them. Big data volumes have immense potential for improved decision-making, but can also cause delay as managers try to sift through thousands if not millions of data points in order to make a decision.
  8. Opt For Progress Over Protection 
    Getting something in place is the most important. Design data management policies in good faith and them implement them consistently across the business. What you decide will touch everyone in the business so it is vital to get all employees on board.
  9. Make it easy for all departments to see your information
    People need access to the data, but they want it to be painless, transparent and easy. Ensure employees know how to search for and analyse the data so they can release its value. Integrate paper into the process by digitising it.
  10. View The Data In Context
    Data in isolation is essentially worthless. Don’t get so lost in the detail looking for patterns and trends that you lose sight of the big picture.
  11. Consider Your Carbon Footprint
    Tape consumes a fraction of the power of disk, and even less than all that data stored in the cloud (which in reality means on a permanently switched-on, artificially-cooled server in a data centre somewhere.)
  12. Know where the data is and who is accountable for it.
    Always.

Conclusion

Big data is a transformational force whose impact we are really only just beginning to grasp. Away from the fog of hype and the over-inflated promises that invariably accompany an emerging trend, this study has tried to focus on the every-day challenges facing hardworking mid-market firms across Europe trying to get to grips with a surge in data on top of all their other responsibilities and goals.

We have hopefully shown that realising the huge potential of big data insight is wonderful, but needs to be set against the challenge of backing up a vast volume of data while employee desktops are shut down, everyone has gone home for supper and the cleaners are vacuuming the carpet.

Our reality check list aims to address this. It is a list that companies everywhere – not just mid-market firms – can use to structure their information management and prepare for the future.

Mid-market firms have so much to gain from big data. Every single one of today’s most valuable global brands has made big strides in applying big data. This list includes enterprise brands but also mid-market firms such as Zara, Gucci and Adidas, Goldman Sachs and JP Morgan, John Deere and Kia.

A storm is full of energy, and the information storm is no exception. To harness this energy for your business you don’t need all the answers today. But you do need an approach to information management that can bend without breaking in the gales to come.