In 2010 alone, the world created enough digital data to fill a stack of DVDs that would stretch from Earth to the moon and back – a distance of over 477,000 miles. The amount of unstructured data created each year since then has grown around 60% year-on-year, and is continually increasing. According to some estimates, the “stack of DVDs” would reach Mars by this year – over 450 million miles.
The exponential growth of so-called Big Data is unprecedented and is matched only by its enormous potential to change the way we all live, work and think. Computing colossus IBM says that in each day in 2012, 2.5 quintillion bytes of data were created – 2,500,000,000,000,000,000 bytes. It was also estimated that, by 2015, the volume of digital content in the world would have grown to a staggering eight billion terabytes – that’s difficult to comprehend. Let’s just say that this number involves a perplexing number of zeros.
To briefly put this incomprehensible physical amount of data in context, a gigabyte (GB) is 1,024 MB, or one million bytes. In data terms, that’s equivalent to 10 yards of books standing side by side, 200 five-minute MP3 songs, or around the size of a standard definition film.
With an incredible 90% of the world’s data created in the last few years alone, as a society we are producing and capturing more data each day than was seen by everyone since the beginning of the Earth.
Size Doesn’t Matter
But ‘Big Data’ is more than simply a matter of size. It’s a valuable opportunity to find key insights and emerging trends in data, to help businesses gain a richer and deeper understanding of their operations. In turn this allows them to make more informed decisions and answer questions that have previously been considered unanswerable.
Many retailers, such as Tesco, Sainsbury’s and Costa, closely monitor general buying habits through the information gleaned from the regular use of loyalty cards, and are keen to retain their highest paying customers with specifically targeted marketing. As is well documented, Tesco were one of the first adopters of loyalty card shopping data, and constantly analyse detailed spending habits of consumers, divisible by age, sex and location among other variables, all underpinned by the transactional date captured through the Clubcard – and it’s transformed their business.
For example, in 2010, they unearthed a trend (via their Clubcard) for fathers to come into stores on their way home from work on a Friday to buy nappies for their children. So the store placed six-packs of beer on the adjacent shelves, and found that sales of beer increased. Similarly, in the digital world, Spotify, YouTube and Facebook all use carefully-mined data to target consumers with tailored music, videos or advertising.
So why is this relevant to big data in hospitality? Clearly similar insights to those gained by Tesco are there to be mined from transactional data, and through the development of loyalty and CRM systems that capture buying habits, the basket of goods, frequency of visit, average spend and so on. One of the holy-grail opportunities that operators speak of at the moment is the pulling together of loyalty, with location-based and bespoke marketing. In other words, hospitality brands talking to customers based on how they shop you, when they are nearby and likely to visit (i.e. when it’s most relevant).
Similarly, there is a data opportunity through management systems – the mining of data for insights to aid decision making and ways of working, be it in the kitchen, in the HR department or procurement and finance.
Changes in Technology
Previously, this was only achievable by the largest companies with the deepest pockets – those that could afford to spend six-figure sums on bespoke business intelligence (BI) software. But the rise of cloud computing has made the mining of data accessible and manageable for all companies, regardless of size.
Systems are available that plug into management software, crunch the reams of data passing through, and spit out graphical charts that illustrate the performance of the various key functions that are central to a multiple-site hospitality business.
So what does the use of big data in hospitality mean in practical terms? It means at the click of a button, senior management has the ability to understand their businesses in a deeper and richer way than ever before.
Operators can effortlessly and instantly see who their best supplier is (for instance, who delivers on time, with fewest mistakes) and leverage this insight to create better deals. Most suppliers are between 90-97% accurate, but any time spent returning orders and organising financial reimbursements could be better spent serving customers or growing the business.
Other examples include the ability to track time and attendance of your best and worst staff by restaurant, area, region or nationally, as well as assessing who your best GM is, not only by sales or profit, but also by staff retention or gender balance in team. Furthermore, operators can drill into HR data to determine what the average length of service is in their company by restaurant, area, age, qualifications and so on.
Big Data in hospitality is very much in need of smart management – it is pointless having the information sent through in an unreadable report a fortnight after the event, sits in an email account and gets archived after six months. Recognising patterns in the billions of files that your BI system ingests and indexes holds the key to competitive advantage. It is maximising the potential of your data sitting in the cloud, which is of vital importance.
To successfully seize these opportunities, functional, effective dashboards are required, such as Fourth Analytics, bringing every moving part of your business together in one place, so you can react quickly and in confidence that the data is reliable and accurate.
The Future of BI
The convergence of big data and mobile devices is still emerging, but leveraging mobile BI will become more prevalent, with apps, synchronisation and the management of real-time data, resulting in almost instant access to BI systems, which can therefore be used to its full potential.
Business intelligence in hospitality allow operators to understand what happened or is happening in their business, analyse why it happens, project future growth and prescribe actions that should be taken, all in one convenient and easy-to-use console.
Decision science is fast becoming the most powerful economic engine for enterprises of all sizes. Creating an analytics culture throughout your business, and ensuring all understand the benefit of empowering your operation with consolidated, reliable data instantaneously, is the key to being the most effective of modern companies.
Where next for big data in hospitality? The sky is the limit.
For more information on Big Data and analytics in the hospitality sector, download our white paper.
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