Big Data Getting Smaller, Cheaper

Big Data-as-a-service is making the digital universe more accessible and affordable for small-and-midsize businesses.
David RosenbaumFebruary 14, 2013

This is why they call Big Data big: IDC, a research firm, predicts that the Big Data market — including technology and services — will grow at a 31.7% compound annual rate through 2016, becoming a $23.7 billion market by 2016.

IDC also says the digital universe — all the data stored in the world’s computers — will increase by a factor of 300 by 2020. There is, however, a yawning Big Data gap: only about 3% of that universe’s potentially useful information has been identified, and even less has been analyzed. Which means 97% of the world’s stored information is basically worthless.

Those are all big numbers, both in terms of the dollars it takes to crunch them and in the sense that it’s difficult for small- and midsize-company CFOs to figure out how it’s possible to apply them to their businesses. Big Data historically has been an expensive proposition. Software giants like Oracle, SAP, and SAS all have Big Data solutions far beyond the means of the vast majority of small-and-midsize businesses (SMBs), even if such businesses had the resources to buy the computers and hire the data scientists needed to pose questions and interpret results.

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But times are changing. This month IBM cut the price of its Power server computers — which run the Linux system upon which so many Big Data solutions depend — in half, to $6,000, in a play for the SMB market. And some companies are beginning to offer what is essentially Big Data-as-a-service. They do the collection, number crunching, and analysis; you skip the computers and scientists, paying a fee for service.

HA Advantage, a division of privately held HA Logistics, provides software-as-a-service freight management and financial-reporting solutions primarily for small-to-midsize less-than-truckload (LTL) manufacturers and wholesale shippers. What’s most important to Aaron Bolshaw, HA Advantage director of marketing and inside sales, is making sure he’s speaking to the right prospects: companies spending between $500,000 and $5 million a year on LTL transportation.

Bolshaw’s assumption is that companies that spend more than $5 million will already have the technologies they need to manage their loading docks, warehouses, and shipping, and won’t be open to HA Advantage. If they’re spending less than $500,000, he says HA Advantage may not be the best tool.

If Bolshaw can target the right companies, he can avoid the expensive, inefficient “spray-and-pray” method of marketing HA Advantage’s products and services.

The sales executive knows that if a company is growing, if it’s hiring people and investing in new equipment, it’s more likely to be in the market for his company’s goods and services than a business that’s just puttering along. He also knows that an organization that’s in trouble, that’s experiencing declining revenue, cutting back on its purchasing, or laying people off, may be looking for technology help.

Companies that have just been acquired, or have bought other businesses, will be looking to merge their logistics and financial systems with those of the new companies, and therefore will be a good candidate for HA Advantage’s pitch. But “it’s extremely time and labor intensive to find the right companies,” Bolshaw says. They’re largely private, and their financials — their purchasing behaviors — are hard, if not impossible, to access. “I have 65,000 companies in my database,” he explains. That’s the easy part.

He has, however, to qualify the companies, meaning he must identify which ones are in his company’s sweet spot: which ones are spending the right amount on LTL shipping. “For every qualified account that we identify, it takes us about 120 calls and, including e-mails, about 150 discrete activities. But I can do all the targeting I want — I want these companies in this revenue band — but I still can’t find their LTL spend,” Bolshaw says. 

That’s critical to him because of the correlation between the potential customer’s dollar spend in LTL and its projected operational needs. “The more a company is spending on transport, the more people they’ll have working on it,” Bolshaw says. “They have to manage that. So they’ll invest more in technology.” And the executive’s job is to harvest some of that technology spend for HA Advantage.

About a year ago, Bolshaw signed up with Cortera, a business-to-business service provider that says it tracks $1.6 trillion in B2B purchasing. Cortera collects vast amounts of private-company data, from simple credit ratings to granular, digital universe Big Data.

The latter includes, for instance, what a company is buying (if a company has just bought 100 new speaker phones, for example, that’s a good growth sign) and whether its indirect spend is rising or falling. Cortera crunches it and sells it to CFOs under a software-as-a-service subscription model (Big Data-as-a-service). Cortera CEO Jim Swift calls it “an early-warning system for CFOs for revenue.”

Noting that “credit ratings are a trailing indicator,” Swift says “they only focus on payment behavior. Companies can control that. Small businesses especially will pay their bills as long as they can.”

Purchasing information, on the other hand, is a better predictor of a company’s prospects and a more accurate way to target potential customers, he says. The aim is to derisk marketing, thereby decreasing the cost of customer acquisition, says Cortera chief marketing officer Gary Brooks. “Marketing is binary,” he says. “The target buys or doesn’t. It’s a waste if you market to people who can’t or won’t buy.”

Charged with driving top-line revenue, Bolshaw says that by using Cortera reports — broad snapshots of spending trends that indicate growth — HA Advantage is now able to identify businesses in active purchasing cycles. His company is also getting “actual LTL transportation spending” information that translates into faster, more efficient marketing.

Bolshaw says he will spend between $10,000 and $12,000 with Cortera this year, and the return on investment is the software’s capability to enable him to identify targets six times faster than before. “That’s critical for our business,” he says.

“The faster we can get to them, the faster we can close.”

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