The AMI-Partners Blog

I was recently engaged in a conversation with a friend about social media, and its benefits and detriments.

My friend half-suggested to me, “Facebook and Twitter will always be free for consumers, right?”

I responded, “You’re assuming that we aren’t already paying to use social media.”

In the traditional sense, users are not obligated to pay in order to participate in social media. But social media is by no means traditional. In fact, when we sign up for and participate in social platforms, what we are offering to various types of organizations is arguably much more valuable than money itself—data.

“Data is the currency of business,” claimed Dan Choquette, Director of Cloud & Big Data Solutions Integration at Dell, in front of a crowd during last week’s Cloud Expo 2012 in New York City.

A lifetime Red Sox fan, Dan began his presentation discussing baseball strategy, as showcased in Michael Lewis’s novel and later Oscar-nominated film of the same name, Moneyball. The story’s premise is that small-market teams like the Oakland A’s, without deep pockets, consistently find it difficult to compete with large-market teams like the New York Yankees. Without money, Oakland A’s manager Billy Beane was forced to strategize a new approach to assemble a winning team.

With the help of statistical-minded MBA graduates, Beane decided that the customary method of evaluating, recruiting, and paying players was based on subjective and unproven assumptions. The Oakland A’s applied rigorous statistical analyses to available data, in order to determine true player efficiency and value, even creating new performance standards like on-base percentage along the way. By the following season, the A’s were able to spend a third less than many large-market teams while still competing. They learned how to properly translate data into wins.

In a way, these small-market teams are analogous to small and medium businesses (SMBs) who need to make the most out of their limited resources and increasingly compete with larger firms. Today’s SMBs have access to a spectrum of data, ranging from demographics to emails to tweets. Gathering data should not be the end, but rather the beginning of data-oriented strategy.

In Dan’s presentation, he discussed the stages of data and the corresponding functions of firms at each stage as follows:

In order for SMBs to compete with larger firms, they need to apply a “Moneyball” philosophy in turning bits and data into actionable insights. There are numerous business intelligence/analytics and CRM solutions available to small firms that can be applied to internal and external strategy, including sales, marketing, lead generation, customer service, and social engagement efforts.

Many SMBs have turned to the Cloud for scalable and cost-effective data solutions. For example, according to AMI-Partners’ SMB Global Forecast Model, 45% of CRM spending was through the Cloud in 2011. For larger firms looking to bring together large quantities (>50GB) of data, who don’t require real-time analysis, the solution of choice may be Hadoop—the open source project that merges structured and unstructured data into a consolidated storage and analysis environment.

Of course, there is no one-size-fits-all data solution. Quantity, time-sensitivity, function, and type of data should all be considered. For SMBs who are stuck in the chaos and retention phases of data competency, it would be imprudent to ignore the opportunity cost of passing up data insights. If data are the currency of business, then free money is all around us for the taking.

- Monik Sheth, Research Analyst