Analytics Will Flatten the Competitive World of Business
Two things stand out in the recent New York Times article on how companies are using predictive analytics to mine customer behavior. Companies that have pioneered these processes, are facing two challenges: access to key talent and sustaining their technological superiority.
Top analytics talent will be hard to come by, if McKinsey's well known report is to be believed. This report predicts a shortage of 200,000 qualified people who combine math skills with minimum viable business acumen, by 2018.
However, what will be even more challenging for companies like Target, described in the NYT article, is maintaining their technical edge. Cognizant of this, Target muzzled their employees from divulging more about their business analytics processes and tools. However, this in my opinion, is bolting the barn door after the horse.
There were two reasons why large companies could sustain their competitive advantage in critical areas like analytics in the past. One was access to tools/computing. The other was access to talent. Top quality data mining software was out of reach for small and mid-sized businesses in the past, however the availability of open source desktop tools for analytics has made this a thing of the past. Combined with cloud computing, we can only expect the viability of using these technologies to increase and bring in more of the "dispossessed" to the data mining arena.
While acquiring in-house talent may remain a challenge for the foreseeable future for large companies, smaller and mid-sized competitors can tap into vast pools of geographically scattered analysts via crowdsourcing. Effective data encryption will address security concerns and allow communities of analytics experts to compete in building cutting edge models at a fraction of the cost of maintaining expensive in-house teams of experts.
It is only a matter of time when this confluence of open source software, cloud computing and crowdsourcing will democratize the world of advanced business analytics. When that happens, the competitive world of business will have become truly flat.