Big Data – Big Win?
The short answer for the question in the title is: yes, it is big win. With the extensive analysis of arriving patients’ data, mortality rate was successfully reduced by 20% in certain areas of health care. In a utility company, the precision of the allocation of energy resources produced by power plants was improved by 99%. Thus Big Data is not a scam. In our article, we are going to investigate the question from the perspective of automotive companies: what kind of advantages can these companies achieve exactly by analyzing data?
The topic was elaborated in cooperation with Tao Consulting. This is the second part of the article.
What is Big Data?
Big Data basically means the analysis of unstructured, high volume data and the trends behind it. Of course companies had analyzed before but the trend that emerged in the last couple of years is different from classic methodologies. In the Big Data era, data is not necessarily collected in a targeted way. For example Ford fills its test cars with sensors that collect 25 gigabytes worth of data in an hour on the vehicle, the driving style and the environment. From this huge amount of data, or from certain parts of it to be precise, useful information can be retrieved by analysis.
This is where Big Data starts to make sense from the perspective of case studies. A company can benefit in many ways from the data arriving to business areas and the retrieved information. Analyzing all the data of the car can lead to a better understanding of the given driver’s habits and can provide information on the vehicle’s actual data. Let’s start with the latter.
More accurate forecasts
Let’s imagine that our car’s performance is monitored continuously by experts just like in Formula 1 where the engineers are watching the race cars through monitors. The Big Data brings that kind of attention and expertise for the everyday driver. The on-board computer can remind us if it is time to change oil or if the brake at the right rear wheel is dangerously worn after 500 km. Such information has been available for certain car models but the real value for firms would be to have such information available for them. This way they are able to forecast the need for supplies for suppliers and service stations which leads to cost savings. The above described system is called Smart Inventory Management System (SIMS) at Ford and it has been extended to car orders as well. Thanks to SIMS they can provide car dealerships with more accurate forecasts regarding the expected demand.
Fleet management belongs here as well. Fleet operators would be relieved if they had all the information on the vehicles automatically and they would not have to check the cars manually.
Improving user experience
Improving user experience can be very conspicuous. Ford started using Big Data tools to analyze social media in order to learn those habits and desires of people that traditional market research does not find. This led to such interesting innovations like the trunk that you can open with your foot. Anyone who has tried to find the keys with both hands filled with groceries will appreciate this innovation.
Of course, safety is also improved, it is enough just to think about the above mentioned component-monitoring system. But possibilities go far beyond that analysis of internal data: vehicles can easily access information on the weather or traffic which can be utilized by the on-board computer to plan more precisely facilitating cost-efficiency and environmentally friendly operation.
Finally, it is important to mention the main source of revenues: the consumer. Manufacturers – for understandable reasons – like to understand their customer as much as they can, and beyond social media, Big Data can help with that. When does he use his car? How fast does he drive? Does he turn on the fog lights when it is foggy? Based on this information, producers can build extensive customer profiles and they have probably already started. In an industry where customers make rare but high value purchases, this type of microsegmentation is worth gold.
What is the future?
All in all, Big Data creates value for all important stakeholders. Suppliers, services stations and car dealerships receive more accurate forecasts, fleet managers’ lives will be easier, producers can know their consumers better who in turn can enjoy their cars more.
Of course, Big Data is about money at the end of the day. Producers can save costs on smaller components and have a better chance to sell a car for a customer of which they have a more detailed profile on hand. Besides this there are several other opportunities available: data can be sold to rental companies, insurance companies or weather forecasters.
The range of opportunities is very wide. The Big Data revolution has begun and it will fundamentally change not only the automotive industry but other fields as well.
The elaboration on the subject from an IT perspective can be found in Tao Consulting’s related article.