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Big Data – the new frontier for outsourcing and BPO Part III of III

By Mark Atterby – Senior Staff Writer

The benefits associated with ‘big data’ centres around giving organisations the flexibility and insight into their business that allows them to act or take advantage of opportunities or overcome problems as soon as they occur.

With ‘big data’ an organisation can sift through data in social media and networking sites to see if there are complaints or bad reviews about their products and services and compare that with data held in their internal systems. They can analyse how complaints or bad reviews are impacting sales, which products are in greater demand, and understand why customers may be turning away from the brand.

According to Chris Luxford, president of Aegis-Global Australia and New Zealand, ‘big data’ can work in real time, allowing an organisation to respond in real time. For example, a customer of organisation A is thinking of changing over to organisation B and posts comments on a number of blogs asking for people’s opinions of organisation B versus organisation A.’Big data’ allows the possibility of organisation A to identify who that customer is and to make some offer or deal that prevents them from switching to competitor B.

“Big data offers the greatest opportunities to insurance, financial, telecommunications, utilities, etc, or any other industry where organisations store vast amounts of data”, said Kaleem Chaudhry, Regional Director for Enterprise Technology of Oracle Asia-Pacific in a recent news story.

In the telecommunications sector “big data” can be used to analyse thousands of calls to determine the quality of the call service. A number of factors can be analysed simultaneously to generate vital information, such as reasons for calls being dropped, which will help the company to take action and quickly resolve issues.

According Gary Spakes, from the SAS Institute, combining ‘big data’ with predictive analytics can help organisations in a number of areas, including:

  • Detect, prevent and remediate financial fraud.
  • Calculate risk on large portfolios.
  • Execute high-value marketing campaigns.
  • Improve delinquent collections.

It allows organisations to develop models and ask “what if?” questions about their data. For example, developing a statistical model that associates buying behaviour with customer profiles can then be applied to future behaviour of customers. The application of that model is referred to as “scoring” and is the basis for predictive analytics.

This type of analysis is very different from traditional business intelligence, which is more about asking simple questions about data in one or two dimensions (e.g., How many widgets did we sell in Sydney this week?) ‘Big data’ and ‘big data’ analytics allows for sophisticated predictive modeling and analysis.

‘Big data’ is the next ‘big thing’ for enterprise computing and the next evolutionary step for BPO. The challenges are not so much in the amount of data being collected, though this issue is significant, it is more about what useful information can be extracted and how it can be employed to improve business performance.

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Worldwide and U.S. Business Process Outsourcing Services 2012-2016 Forecast

By Global Information, Inc.

IDC’s new Business Process Outsourcing market forecast provides details through 2016 for the worldwide and U.S. business process outsourcing market by key horizontals: Customer Care Business Process Outsourcing Services, Finance and Accounting Business Process Outsourcing Services; Human Resources Business Process Outsourcing Services and Procurement Business Process Outsourcing Services.

IDC expects the worldwide BPO market to reach $202.6 billion in 2016, representing a five-year CAGR of 5.3%. The U.S. market is expected to grow at a five-year CAGR of 4.2%, reaching $92 billion in 2016.

IDC concludes that BPO services vendors are beginning to assist the transformation efforts of their customers. Evidence is now seen in case studies from providers that describe case studies where they have leveraged their automated sub process solutions, big data, business analytics, mobility, cloud delivery, and so forth, and as a result, customers are not only reducing errors/defects in their processes but beginning to standardize processes globally, analyze business performance (often in real time), and gain more insight and control over their business operations.

An Executive Summary for this report and a free sample of the full document are available at http://www.giiresearch.com/report/id240680-worldwide-us-business-process-outsourcing-services.html

Demand Analysis of the BPO and Contact Centre Market within the South African Financial and Retail Sectors
For a detailed look at a microcosm of BPO activity, readers should look to the new Frost & Sullivan market research report on the South African business process outsourcing and contact centre market. It provides the current and future size of the market, including External Challenges, BPO Market Drivers and Restraints.

The forecasts are done over three scenarios, each with differing levels of success in the outcome: high road, middle road, and low road. The assumptions associated with each scenario are also presented. More pertinently, the study analyses the demand dynamics of the market, which encompasses identifying the key end users in the financial and retail sectors and how to understand user requirements and trends. It also provides strategic recommendations for current and future market participants.

A summary for this report and a free sample of the full document are available at http://www.giiresearch.com/report/fs239827-demand-analysis-bpo-contact-centre-market-within.html

Read more here: http://www.sacbee.com/2012/05/16/4494271/global-business-process-outsourcing.html#storylink=cpy

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Australia’s BHP boss threatens to invest offshore

By Elizabeth Knight, Phillip Coorey

BHP attacks Government over tax and IR

AUSTRALIA’S most influential businessman, Jac Nasser, has slammed the Gillard government’s record on tax and industrial relations, saying that unpredictability is undermining investment and could push BHP Billiton offshore.

Addressing the Australian Institute of Company Directors yesterday, the chairman of BHP Billiton demanded the government deregulate the industrial relations system and stop targeting the minerals sector with taxes. “I cannot overstate how the level of uncertainty about Australia’s tax system is generating negative investor reaction. People don’t know where it’s going,” he said.

Mr. Nasser said that given the uncertain global outlook and the fact that some domestic leading indicators were not encouraging, the government needs to get the two key levers of tax and industrial relations right to boost sentiment and confidence.

The most recent tax changes affecting the mining industry are the minerals resource rent tax – which BHP helped design – and the carbon tax.

Mr. Nasser’s comments suggest the mining industry is delivering a warning to the government against any additional tax imposts to capture further revenue from the mining boom, especially if the mining tax fails to raise the forecast revenue – as the miners and the opposition are claiming.

Mr. Nasser said BHP, like many in the resources industry, was feeling the pressure from increased costs, increased taxes and royalties from state and federal governments, continuing global volatility and “a much more difficult industrial relations environment”.

He warned BHP had a “diversified portfolio” of countries and products in which it could invest. “Given our range of options, if we can’t meet our criteria in any one project, product or geography, we will redirect our capital somewhere else or we simply won’t invest at all,” he said.

Read more: http://www.theage.com.au/opinion/political-news/bhp-boss-threatens-to-invest-offshore-20120516-1yrc2.html#ixzz1v52S6pAi

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Will the changing Australian workforce ever be the same again?

In this opinion piece Chris Luxford looks at the challenges facing the local workforce, like off-shoring and the shifting skill requirements, and how these will impact how businesses access staff with the right skills for their operations.

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin

A 14-year-old in 2012 considering what kind of career they might be interested in once they leave school has a tough challenge on their hands. Not only because of the seemingly endless possibilities, but also because many of today’s jobs may have become obsolete by the time they enter the workforce, and many brand new ones will have been invented. Copyboy, lamplighter, typesetter…all jobs of yesteryear that no longer exist. And who would have thought all those years ago that one day we would be seeing job advertisements for the likes of ‘Digital Strategist’?

The nature of work is changing across the globe. There was a time when people lived in individual, self-sufficient communities. Over time this has gradually shifted towards an interdependent global economy. During the last century what people do, where and how they do it has fundamentally changed thanks to advancements in technology and the likes of cloud computing and ‘teleworking’. These changes are set to continue at a rapid pace.

Australia’s workforce is changing more rapidly than most. Significant downturns have occurred in retail and manufacturing due to globalisation and widespread job losses in the financial sector have also been noted.

In manufacturing, for instance, close to 1,000 Australian workers have been made redundant in the past 6 months. Australian banks are consistently announcing plans to cut staff, with the widely held belief that 5,000 jobs could disappear from the sector over the next two years.

Aside from redundancies, many companies have turned to off-shoring as a way of reducing costs. Our best estimate is that as many as 50,000 Australian jobs have been off-shored during the past decade. We should expect this trend to continue and certainly should not be fearful of off-shoring, as long as it is done correctly.

Take legal firm Baker McKenzie as a case in point. As far back as 2001 it established a dedicated back office facility in Manila, referring to the action as ‘legal process off-shoring’. The resultant shared services centre now delivers cost savings to the company of up to $US25 million ($26.8m) per year.

It is time for industry to accept that employee resources will come from many sources – local, regional, national and international. At Aegis, we have developed a model that includes what we refer to as ‘cross-shore’, whereby locals who work for an organisation actually move to another country and deliver the exact same service overseas – USA agents being relocated to Mumbai, for instance. This approach delivers improved economies of scale, development opportunities for the individual employee by offering them the opportunity to explore the world, as well as cost savings for all involved, without compromising the quality of the work. These are usually short-term stints overseas and generally involve some kind of official training program, leaving the employee with an internationally recognised qualification.

The challenge for the Australian workforce is the dramatic shift of skill requirements due to rapid advancements in technology, communication, automation and processes. Traditional organisations that once required mechanical task based skills now require “knowledge worker” type skills. Whilst unemployment in certain areas increases, skill shortages across many other sectors likewise increase.

A recent skills index highlighted an undersupply of skilled labor in corporate services, IT and engineering – another reason to consider tapping into external and overseas talent to ensure Australia does not forgo the benefits of its strong links with the growth regions of Asia.

There is a massive time commitment involved in up-skilling, therefore sourcing talent elsewhere becomes a more and more attractive option.

To address this, organisations need to re-think how they access people with the skills to execute all aspects of their business operations. The traditional hire, train, deploy, develop, promote model simply doesn’t cut it in a modern day business environment. Nor will the traditional model of outsourcing non-core business functions against a strict contractual and service level model. In short, new models for the engagement of resources will need to be developed. Mallesons Stephen Jaques, for instance, announced late last year that it planned to utilise the skills of 200 trained lawyers in India.

Conventional thinking on core versus non-core function outsourcing will come into question. Non-core functions in many companies have already been outsourced, mostly for cost arbitrage. There isn’t much more that can be extracted here, but is it delivering value? When it comes to core functions, the continued skills shortage in many areas limits innovation and causes costs to rise in the fight to retain talent, eroding margins. Organisations will need to look at unique partnering models that enable them to access highly skilled and talented resources critical to the core of their business, but with the flexibility and capacity to scale the workforce up and down and move efficiently from project to project, the same as Software as a Service (SaaS) has been adopted in IT to deal with business and traffic fluctuations.

In summary, more and more organisations are coming to realise that over the next two decades true competitive advantage will only be achieved through accepting that resources and skills will come from many different sources and locations and will be engaged for varying degrees of time.

Australia has a unique opportunity to take a world leading position in creating workforce opportunities in the new global economy. But this can only happen when companies develop the courage to boldly change their operating paradigms and adopt a new approach.

Posted in IT Outsourcing, LabourComments (0)

Market Snippets – Week 18, Year 3

  • The Australian BPO market is expected to grow by 20 % over the next year or two.
    Get your copy of the Australian BPO research study now.
    Go to – http://thesauce.net.au/sauce-research
  • The Australian Business Process Outsourcing Association (ABPOA) is hosting a Cocktail Reception in honour of a trade delegation from the Business Processing Association of the Philippines (BPA/P) and the Australian-based Philippine Trade and Investment Commission.

    We would like to invite ABPOA members and guests to attend, meet, and network with our friends from the Philippines. 



    Where: Level 15, NSW Business Chamber, 140 Arthur Street, North Sydney NSW 2060
    When: Monday 21st May from 6:00 pm to 8:00 pm

    Tickets: To secure your place at this popular event, please register at
    Go To – http://abpoabpap2012.eventbrite.com

  • Vocal Authenticity and Insightful Learning
    Transform your business through Vocal Authenticity and Insightful Listening

Use your voice to create more meaningful and trusting connections with others over the phone and face to face!

    Business Enterprise Centre

19/323 Castlereagh Street
Haymarket NSW
    Thursday 31 May 2012
    6:30 pm – 9:00 pm

Beverage and canapés provided
    Contact: admin@ccma.asn.au

  • New Generation of UTM Firewalls Deliver Proven Enterprise-Grade Security to Small and Distributed Organisations. Dell SonicWALL TZ Series Provides Market-leading Security Combined with High Performance, Ease of Deployment and Broad Mobile Platform Support.

    The TZ 105 and TZ 205 provide an array of security features that deliver enterprise-grade network protection powered by Dell SonicWALL’s patented Reassembly-Free Deep Packet Inspection®. The only firewall in its class to truly enable mobile workforce with native SSL VPN remote access client for Apple iOS®, Google® Android™, Windows, Mac OS and Linux devices Delivers wire-speed Deep Packet Inspection performance and protection for today’s broadband connections.

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Marketers outsource traditional before online marketing

The number of businesses outsourcing traditional marketing functions is expected to jump over the next 12 to 24 months from 9% currently to 21%, according to IBM’s ‘Australian Business Process Outsourcing (BPO) Research 2012’.

The report, built from a survey of 216 businesses, rates traditional marketing as the fourth most outsourced business process, ahead of digital marketing, which is currently outsourced by a surprisingly low 6% of businesses. Intention to outsource online marketing over the next year or two is also lower than for traditional, with only 17% anticipating that they will seek external providers.

The greatest share of business for traditional marketing service providers came from the telecommunications and transport industries, with 33% and 31% of businesses in these sectors outsourcing at least one marketing process. In the future, suppliers should look to government and education sectors as their primary sources of outsource business in the future.

Adoption and future adoption of traditional marketing outsourcing across sectors

When it comes to online marketing, telecommunications and transport businesses are the highest current adopters of outsourcing, while, looking forward, telecommunications and banking, financial services and insurance (BFSI) will increase their outsourcing the most.

Adoption and future adoption of online marketing outsourcing across sectors

The BPO report goes on to break down a number of sub-processes for both traditional and online marketing. Market research is the most commonly outsourced traditional sub-process, with 74% outsourcing this function, and also ranks as the sub-process most likely to be outsourced in the future.

Currently 32% outsource content development and 16% outsource campaign management; both of which are expected to be outsourced by more than one in ten who are yet to do so. Customer service is outsourced by 11% of business currently, but a further 21% intend to in the next 12 to 24 months.

Adoption and future adoption of traditional marketing outsourcing by sub-process

Digital marketing is an area where businesses are looking for support due the volume, velocity and variety of data that comes with the territory according to BPO CRM Leader for Growth Markets at IBM Australia, Peter Monk. “The data complexities around it are not something that organisations can or want to get their head into,” Monk says. “They’re saying it’s simply not why they’re in business.”

Social media has been a great influence in driving usage outsourcing of online marketing according to the report. However, the online marketing sub-processes most commonly outsourced currently include multi-channel management at 50%, analytics at 29% and content management at 29%. In the future additional businesses are most likely to outsource content management (21%) and reporting (21%).

Adoption and future adoption of online marketing outsourcing by sub-process

The research also examined online marketing strategies, discovering that most organisations (59%) outsourcing the function have some sort of online marketing strategy. However, these still appear to be in their infancy, with only 7% of organisations that currently outsource online marketing having a constant engagement strategy, and 14% having an active use strategy. One in five do not have a strategy in place and a further 21% have a passive online presence.

Get your copy of the Australian BPO research study now.

Go to – http://thesauce.net.au/sauce-research

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Cost not the driver of Australian outsource rise

By Martin Conboy of The Sauce

Most Australian companies don’t want to send business functions offshore, but many intend to outsource a lot more roles in the next two years and the primary aim isn’t to reduce costs, according to our recent survey.
The survey found 83 per cent of companies would prefer not to send work offshore.

However, increases in outsourcing were expected across a range of areas including finance and accounting, HR, marketing, reporting and analytics and print and document management.

In Australia, there are many businesses both large & small that have outsourced or are about to outsource a number of business processes. There is no doubt that the outsourcing market has burst out of the shadows in the last two years.

Outsourcing has become a valuable tool for businesses to deploy in a hyper competitive market. The drivers of change, from a lift & shift approach to a more considered business expansion opportunity means that organisations are beginning to see that by outsourcing their non-core business processes, they have a lot more time to spend on a core competencies; the work they know best.

Up to now outsourcing has received a bad rap. As a result, most Australian businesses, possibly out of fear of the unknown, have not properly explored the opportunities that it presents. Often mistaken for ‘offshoring’ it is only now that outsourcing and offshoring are having their day in the Sun.

As Ken Henry (Australian Secretary of the Department of the Treasury) noted as far back 2006: “Australia has much to gain from off-shoring – most obviously through a lowing of costs to business and ultimately consumers. Opposition to ‘offshoring’ is based on the same protectionist nostrums that were once used to support the high tariff wall that a generation of Australian policy makers has been busy dismantling. It may be dressed in a different garb, but it is no more respectable.”

Being apposed to importing services through offshoring is like being opposed to imports. It would mean if we followed it to its logical conclusion that Australians would be unable to have iPhones (Heaven forbid) travel overseas (Say its isn’t so) or drive well made Japanese or sexy European cars. (Wouldn’t happen!)

Australians don’t bat an eyelid by taking advantage of our high foreign exchange rate and grabbing a bargain on line, so how is that any different from buying a service online (via the internet).

Asia’s surging growth – including high demand for our commodities – has placed us close to the engines of global wealth creation. Prices for the commodities Australia sells to the world have never been higher, providing an unprecedented opportunity. So apart from reaping the benefits of outsourcing be it locally (In Country) or off shoring we should be spreading the love around to our Pacific neighbours.

Having said that there are some challenges as well, a recent report conducted for Deloitte Consulting by the Economist magazine indicated that across the Asia-Pacific region one of the major risks facing corporations was staff attrition and lack of human capital .in fact on average 25% of companies across the Asia Pacific region indicate this is a major area of risk.

Its no secret that we have a skills shortage in Australia and many BPO service providers have perpetual ‘Want’ adverts on all of the job boards. It follows that many companies are being pushed down the path of outsourcing and off shoring just to access available staff with the right skill sets.

Our own recent BPO Research report (The Australian BPO Report 2012) http://thesauce.net.au/sauce-research supported by IBM and Fuji Xerox Australia has revealed some interesting insights from the buy side of major Australian organisations. “ The report reflects the rapid pace of change and maturity that the Australian BPO industry has undergone over the last decade. It has evolved from pure cost cutting, to improved efficiency, to strategic transformation and an important part of business strategy,” said Russell Ives, Director, Global Process Services, IBM Growth Markets.

“The report highlights that Australia’s senior business community are aware of the benefits of outsourcing and decision makers are looking towards higher order benefits such as improving financial flexibility, driving free cash flow, strengthening customer satisfaction, increasing market penetration, expanding into emerging markets and taking advantage of the opportunities with a global economy,” said Ives.

Most outsourced business processes
The report highlights that while outsourcing decisions in the contact centre and customer service functions were by far the most widely reported, usually in a negative way, customer service functions are actually not among the top three of most outsourced activities. Human Resources, and Printing/Document Management were found to be the most outsourced functions (15 and 18 percent), followed by Finance and Accounting (13 percent). In the next 12 to 24 months, HR outsourcing is expected to grow to 23 percent.

Marketing and customer relationship management
Outsourcing of marketing processes including CRM (Customer Relationship Management) is predicted to grow by 21 percent within organisations that already outsource elements of this function. Of particular note is that online marketing is expected to nearly triple, growing from 6 percent to 17 percent, signaling major opportunities for organisations offering these kinds of services.

Cloud computing and outsourcing
Another trend emerging in the outsourcing sector is the increased use of cloud services. A large number of organisations are now considering cloud computing (35 percent) when making the decision to outsource; yet a marginal proportion (15 percent) of organisations have adopted cloud computing at an enterprise level as part of their outsourcing strategy.

The report highlights that increased mobility and Cloud will create a ‘free agent’ revolution in service outsourcing as the ability to work from almost anywhere in Australia becomes possible using remote mechanisms. This is particularly relevant for the mining industry, which operates over vast distances. In these scenarios, the value of Cloud services is even greater when it can be tailored to accommodate the unique elements of a particular industry.

So in conclusion we believe that Australia has moved past BPO 1.0 (Lift & Shift) and is sitting somewhere between BPO 2.0 & BPO 3.0 with its foot on the accelerator.

Get your copy of the Australian BPO research study now.
Go to – http://thesauce.net.au/sauce-research

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Big Data – the new frontier for BPO and Outsourcing BPO 4.0 Part II

By Mark Atterby – Senior Staff Writer

The amount of data in the world is rapidly growing at an exponential rate. ‘Big data’, is becoming a key basis of competition, underpinning new waves of productivity, growth, innovation and consumer services. ‘Big data’ offers a range of opportunities for organisations, but there are also some significant challenges.

According to research from McKinsey Global Institute, organisations and their management teams, in every sector, will need to grapple with the implications of big data. Those who ignore it will be left behind.

The challenges

Several issues will have to be addressed to capture the full potential of big data, according to the MGI research. Policies related to privacy, security, intellectual property, and even liability will need to be addressed in a big data world.

Through various online activities, most consumers leave an easy-to-follow trail of digital footprints that reveal who they are, what they buy, where they go, and much more. Organisations want this information to be able to gain competitive advantage and be able to offer the most appropriate offer at the most appropriate time. People can be very sensitive about how their details are used and how information about them may be exchanged between different organisations or across various information systems.

The privacy issues raised by ‘big data’ have yet to be resolved. In his book, Privacy and Big Data, Terence May states, “It is crucial that people are given the choice between opting in and opting out of the use of their identifiable personal data. Companies approaching customers need to be ”utterly transparent” about how they know what they know about a customer”.

Organisations not only needy to put the right talent and technology in place but also the structure, workflows and incentives to optimise the use of big data. As Chris Luxford mentioned, the challenges with big data is not so much around the software tools we have but our approach and lack of appropriate processes to leverage data from a range of sources. Access to data is critical—companies will increasingly need to integrate information from multiple data sources, often from third parties, and the processes have to be in place to enable this.

Too few organisations fully understand big data’s potential in their businesses, the data assets and liabilities of those businesses, or the strategic choices they must make to start exploiting big data. Organisations in Australia, except for the very large ones, are unlikely to have people with sufficient expertise and knowledge to develop and make use of ‘big data’.

The BPO and outsourcing industry has a significant role to play in assisting organisation to exploit the opportunities and mitigate the challenges associated with ‘big data’. Cloud computing will be the enabler to allow organisations to access the full potential of “big data”.

In the third and final part of this series we shall look at the opportunities offered by ‘big data’ and ‘big data’ analytics.

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Data miners find there’s gold in them thar files – BPO 4.0

Catherine Armitage and Nicky Phillips

There’s another mining boom you may have missed. It too involves paying young people six-figure salaries in their first jobs, and exploring deeper for resources that may have been previously overlooked. But it’s not about driving trucks or digging holes. It’s about building algorithms and crunching facts and numbers. It’s mining for data.

Big data is the new business black. It’s a catch-all phrase for the billions of transactions and other bits of information about their customers, suppliers and operations logged by businesses and governments the world over every day. Yesterday’s storage problem has become today’s strategic asset. Turns out there’s gold in them thar files.

“This is the biggest industry that people are only now starting to talk about,” says Anthony Goldbloom, a 28-year-old former Reserve Bank of Australia statistician who has moved his start-up data analytics business, Kaggle, to Silicon Valley where NASA is among its clients. “The whole place is big data mad. Industries like banking, insurance, and increasingly pharmaceuticals are competing on the back of predictive models that get built [by mining data].”

Enterprises are using data analysis not just to improve their everyday business processes, but also to build predictive models of consumer behaviour. Retailers, telcos, airlines, hotels, healthcare and credit card companies are among those with information-rich customer data. In Australia “only really leading companies have realised this as an opportunity”, Goldbloom says. To his knowledge, Telstra, Myer, the University of Melbourne and the New South Wales Roads and Traffic Authority are among those known to have applied large-scale data analysis to their operations.

A 2011 report by McKinsey and Company said using big data to drive efficiency and quality in the US healthcare industry could create value worth $US300 billion ($A297 billion) a year including cost savings. Using personal location data to sell services to individuals could “capture $US600 billion in consumer surplus”, the report said.

Global market intelligence company IDC has estimated enterprises will invest more than $US120 billion by 2015 in data capture and analysis across hardware, software and services. IBM is investing heavily, with almost 9000 “business analytics and optimisation consultants”, 400 researchers and a global network of ”analytics solutions centres”, aiming for $US16 billion in business analytics revenue by 2015.

“There is no end in sight. I think it is an endless opportunity,” says the company’s chief data analytics guru, Jeff Jonas. Among other things, he is working on what might best be described as a digital concierge service. Customers who opt to give the service access to their personal information – such as one or more of their social media accounts and their digital personal organiser – would receive timely and, according to Jonas, helpful prompts to guide their actions and purchases.

“It says, ‘I can see from your Facebook that you like Metallica, and I can see you will be in New York next week, and Metallica is there on the same night. Would you like to get a ticket?’”

“You could subscribe to a service that would be so precise in its prescriptions that you could feel like it saves you time and money,” says Jonas, chief scientist at the IBM Entity Analytics group. He acknowledges people’s possible discomfort at the idea of unsolicited advertisements, but insists users of the service would come to see it as “friendly” and “genius”.

Another company capitalising on the growing expanse of data, and one of IBM’s biggest rivals, is the Silicon Valley data-sorting company Tibco.

The company’s chief technology officer, Matt Quinn, says Tibco’s products aim to give clients the right information, at the right time, in the right place and in the right context.

One of its more unusual client groups, casino operators, use the company’s software to gauge gambler satisfaction. The system collects data each time a gambler uses their casino loyalty card – be it for gambling, purchasing food in the restaurant or paying for snacks from their room minibar – to create a pattern of their behaviour.

The system can see, for example, that the last few times a particular customer visited the casino, the customer stayed for two days and lost between $200 and $300, then promptly left the gaming floor, spent no more money and went home the next day.

“As a casino operator you don’t want that, you want to make people happy and spend more money,” Quinn says.

Enter Tibco’s event processing software. When the system detects the customer is falling into a particular pattern, such as a consistent losing streak that caused the customer to leave during the last visit, it sends an automatic note to a gaming floor attendant to offer the person a free meal, or ticket to a show.

The idea is to distract the gambler long enough that they’ll come back later and continue to play and lose money, albeit in more palatable amounts. While no Australian casinos use Tibco’s products, they are beginning to show interest, Quinn says.

Department stores, whose loyalty programs amass gigabytes of data on their shoppers’ every purchase, have also begun using Tibco’s event processing software to model their customers’ spending patterns and predict their next buy.

Quinn says the software would pick up that every year a certain customer spends a fair bit of money around the beginning of October, which could suggest they have a few birthdays around that time.

This would be a perfect time for the store to offer the customer a discount or voucher, a more effective and targeted marketing strategy than TV advertising and catalogues, he says.

“The systems we’re building are helping [companies] better understand who their customers are.”

Tibco products also analyse data to keep customers loyal.

In late 2010, Tibco bought the technology start-up Loyalty Lab, whose software platform specifies the best time for a company to engage customers in their loyalty program based on data it has collected on previous customer interactions. “It’s technology and psychology rolled into one,” Quinn says.

Specially trained loyalty scientists build systems that trawl through a company’s customer behaviour data to predict certain events, such as what might prompt a customer to leave.

Loyalty Lab’s director of global solutions strategy, Michael Greenberg, says for telcos, for example, there are several events, such as phone calls dropping out, the end of a contract, or more than two complaints, that suggest a customer may be getting ready to take their business elsewhere.

That is when Tibco advises the company to make contact with the customer and make an offer, Greenberg says.
While big businesses make up the bulk of Tibco’s clients, Nasdaq, major league baseball, the Department of Homeland Security and major hospitals also use the company’s data-sorting software.

In 2010, scientists at Melbourne’s Walter and Eliza Hall Institute of Medical Research began using Tibco’s visualisation software, Spotfire, to help identify new drug therapies for diseases such as cancer and malaria.

To locate potential drug candidates, the researchers run tests on tens of thousands of compounds each day, generating hundreds of thousands of data points for each potential therapy.

The coordinator of the medical research institute’s high-throughput laboratory, biochemist Kurt Lackovic, says the unit is capable of running 80,000 reactions a day.

Spotfire takes the results of each reaction and presents them in diagrams, making it easier for researchers to spot trends, outliers and errors rather than searching for a needle in a rapidly expanding digital haystack.

Hype notwithstanding, big data will turn out to be a useful value-adding tool rather than a ”panacea to solve everything”, says Robert Hillard, Deloitte Consulting technology lead partner.

The privacy issues raised by its use have yet to be resolved, he says. It is crucial that people are given the choice between opting in and opting out of the use of their identifiable personal data, he says.

Companies approaching customers need to be ”utterly transparent” about how they know what they know about a customer.

IBM’s Jonas, whose personal motto on privacy issues is ”don’t surprise the customer”, says it is important for people to realise how commercially powerful is the data that locates them in time and space, such as that communicated by GPS devices in cars and mobile phones. People are putting more data online about themselves than ever before, yet when signing up for the latest ”irresistible” service, few bother to read the terms of use, he says.

Read more: http://www.theage.com.au/technology/technology-news/data-miners-find-theres-gold-in-them-thar-files-20120511-1yi3q.html#ixzz1umzIvkI4

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THE NEXT BIG THING: BIG DATA

WHAT IS IT?
Data miner is the hottest new job you’ve never heard of, and it’s making actuaries sexy, at least from an employment point of view.

IN THE MONEY
In Silicon Valley, where the preferred term is data scientist, the starting salary for someone straight from university who can crunch masses of information bits into strategic business intelligence runs into six figures, says Anthony Goldbloom of Kaggle. “These people are like gold. For love or money you can’t get trained people,” he says.

GRADUATES
Australia may not be far behind. Tony Davis, a director of leading Sydney data analytics company Quantium, which counts Wesfarmers, Optus, IKEA, Qantas, David Jones and ING among its clients, says top-drawer graduates could be earning six-figure salaries after “not too long” in the job. He was hesitant to put his employees forward for this article for fear of drawing them to the attention of covetous competitors. But the secret was already out, thanks to Goldbloom, who ranks data scientists around the world based on their success in crowd-sourcing competitions run by Kaggle to solve client problems.

CAREER PATH
Quantium’s Matthew Carle, 26, who graduated from the Australian National University with a degree in actuarial studies four years ago, is ranked No. 40. He won $US6000 last year in a Kaggle competition to solve a business problem for an insurance company. It was “just a bit of fun outside work”, he says. “I was expecting to work mainly in insurance, which is the traditional actuarial path, but it has been very exciting to see how the use of data has spread across different industries.”

PROJECTS
Quantium has a joint venture with National Australia Bank called Market Blueprint, which uses de-identified NAB customer transaction data to show how shoppers buy, according to profile, demographic, retail category, online, offline and so on. The analysis is sold to third parties. A recent project for Qantas involved combining some of its customer loyalty data with Market Blueprint information to better understand what drives customer loyalty.

Read more: The Age

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