How To Find Needles In Haystacks

23 Jan 2013

How To Find Needles In Haystacks

Making sense of reams of data for companies is the new game

Anup Jayaram


Jessica, a 28-year-old New Yorker, loves to buy her clothes at her favourite online store. While she prefers, and regularly purchases, expensive dresses and jeans, she is also particular about the fit. What this means is that she often ends up returning many of the things to the retailer within a week of delivery as the clothes don’t fit her well enough. And it isn’t just Jessica. Every week, thousands of women across the US return apparel to the online retailer.

As the returns began mounting, the online retailer realised that his business model was under threat. That’s when he approached AbsolutData for a solution. AbsolutData studied the purchase and return patterns of consumers closely. “We were able to identify 6-7 common body shapes and the designs that would fit  them. So when the consumer clicks to buy a pair of skinny jeans, she is informed that it may not suit her,” says Anil Kaul, CEO and co-founder of AbsolutData. Of course, the consumer can still go ahead and buy the pair of jeans. But what the retailer is now able to do is provide shoppers like Jessica with a personal shopper. And the plan has worked; since the time AbsolutData’s solutions were implemented, fewer buyers are returning things they bought at the online shopping portal.

Vishal Gondal, managing director of Disney UTV Digital, says he can get a lot of information about people playing video games — their location, frequency of play, when they play, and for how long, etc. This information is used to provide targeted advertising to the player.

These are just some of the ways in which data analytics is making a difference to companies and people’s daily lives. Today, companies doing data analytics are providing solutions to large corporations in insurance, retail, telecom, marketing and e-commerce. Data is the new raw material and, for companies, competing with analytics is the new mantra for innovation, excellence, and leadership.
"Today Data-Driven Decision Making Is A Necessity. It is critical To Lower Costs"
Dhiraj Rajaram, CEO and founder, Mu Sigma Founded: 2005 Location:US, INDIA, UK Number of employees: Over 2,500
Bigger Bytes
The analytics business globally has changed dramatically in the past couple of years, driven by the rising volume, variety and velocity of data generated. Until 2003, the world generated 5 exabytes (1 exabyte = 1 trillion gigabytes) of data. According to Sapient Global Markets, the total data generated worldwide during 2012 alone is expected to touch 2,700 exabytes, a 48 per cent increase over 2011. According to SAP, in 2013, close to 33 per cent of a company’s business intelligence functionality will be available on handheld devices.

Till quite recently, all the data generated was either text or numbers. But not any more. It now includes voice, pictures and videos, thanks to frequent use of social media. Then there is email communication, weather information, news, opinions, and GPS data that have to be accounted for. Data is being generated not just by companies and governments, but by smartphones, tablets and connected devices, including cars. In India there are over 700 million active mobile phone users (second only to China) and over 62 million Facebook users (third globally). Therefore, there is no shortage of raw material for analytics.

Moreover, it is not only the sheer quantum but also the velocity of data generation that has increased. Mobile phone users and Facebook subscribers, for instance, are continuously generating data, which is being analysed by companies. Thanks to the mounting data availability, analytics has now become a central function for companies and most decisions are based on what the analytics team delivers. Earlier, analytics was a specialised function, far removed from key decision-making functions such as sales. The data analysers were a team that was usually buried deep inside an organisation, focused only on number crunching. But all that has changed now.

According to a Nasscom report, the Indian data analytics business is expected to grow at a compound annual growth rate (CAGR) of 25 per cent to become a $1-billion industry by 2020 from its current size of $200 million. It is this growing market that Indian companies and a host of global players are looking to tap.

Many, in fact, feel that the data analytics boom will be similar to the boom in the IT sector in the late 1990s. Says C.K. Guruprasad, principal, global technology and services, Heidrick & Struggles: “Analytics is not just a fad, but an area that is relevant and prevalent.” But the big difference is that unlike the IT industry, there are only a few product companies in the Indian analytics space.

Number Play
Not only the scale, the purpose of analysing data is also changing. Until now, Indian data analytics companies were catering to the needs of multinationals. But, of late, Indian corporations, too, have been taking a close look at the data they generate. Says AbsolutData’s Kaul: “The senior management of large Indian companies has started asking questions relating to analytics. That is a clear sign that one will see activity soon.” The government, too, is waking up to the benefits of analytics.

There are broadly three kinds of data analytics companies — the captives (such as Dell,  Citibank, Hewlett-Packard); the pure-play boutique companies (Mu Sigma, AbsolutData, LatentView, Fractal Analytics, etc.); and the third-party service providers (such as IBM, Infosys, Accenture, etc.).

In some of the ‘captives’, the India analytics team would already be the largest across the world. Dell, for example, has a team of 450 people based in Bangalore. The team is divided across seven verticals — marketing, online, products, pricing, supply chain, Dell financial services and Dell services. Says Pankaj Rai, director of Dell Global Analytics: “Everyone wants to have a business where they can take better decisions. Analytics is an enabler of that.”

While there is growth across the spectrum, it is the pure-play boutique operations that are in the fast lane. The biggest Indian data analytics company is Bangalore-based Mu Sigma, which has over 2,500 employees across India, the US, the UK and Australia. In terms of the number of employees, it is in the same league as global analytical biggies such as UK-based Buxton and Dunnhumby, and US-based iKnowtion. Some of these companies are also looking at a presence in India. Dunnhumby, for example, has already started operations in Gurgaon.

Dhiraj Rajaram set up Mu Sigma in 2005, soon after he quit the Chicago office of consulting firm Booz Allen Hamilton. “Setting up the company was easy, but getting clients was a tough proposition. It was even tougher to convince people to join a start-up,’’ says Rajaram. But within nine months of starting operations, Rajaram got his first client — Microsoft. The company now caters to the analytics needs of at least 100 of the Fortune 500 companies, and has a run rate of $100 million a year. “Today data-driven decision-making is a necessity. It is critical to lowering costs.”

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