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How small businesses can use big data to maximise their potential

Technology for MSMEs: Big data has the potential to transform how small businesses operate and compete in today’s fast-paced, data-driven economy.

Technology for MSMEs: Small businesses have historically faced limitations in leveraging big data due to the high cost of technology infrastructure and the specialised skills required for data analysis. In OECD countries, small and medium enterprises (SMEs) account for about 99 per cent of firms and 70 per cent of jobs and contribute over 50 per cent of GDP in high-income countries worldwide, according to McKinsey.

These enterprises are struggling. Between February 2020 and April 2021, 70 to 80 per cent of SMEs across 32 countries lost between 30 and 50 per cent of revenue. In such a scenario, it becomes essential for small businesses to leverage advancements in cloud computing and data analytics tools to gain insights, make informed decisions and improve performance.

MSMEs in India currently account for 24.63 per cent of GDP from service activities and 6.11 per cent of the manufacturing GDP. The Indian MSME ministry has set a target to increase this GDP contribution to 50 per cent by 2025 as the country aims to become a $5 trillion economy. To realize this vision, entrepreneurs must identify and leverage the business potential of the data they possess.

Identifying business’s potential with data

Consider IndiGo, the largest passenger airline in India, with a market share of 55.9 per cent as of February 2023. The airline has earned a reputation as the first choice for many Indian travellers, thanks to its punctuality, convenient timings, new routes and competitive pricing.

One key factor contributing to IndiGo’s success is its use of big data. The airline has set the standard for applying big data to flight recommendations, including seat, meal, and timing recommendations based on past searches on its own platform and other travel websites. By leveraging predictive analytics, IndiGo accurately predicts where, when and at what time its passengers are likely to fly next.

Another way IndiGo utilizes big data is through demand forecasting, predicting passenger demand based on time and season. The airline increases the number of flights to popular hill stations like Srinagar and Leh and starts flying to uncommon routes like Dharamshala and McLeod Ganj during the summer season. The airline benefits greatly from its use of big data in data findings, analysis, collection and filtration.

Small businesses can also benefit from big data by uncovering concealed patterns, market trends and customer preferences. This enables informed decision making offering a competitive edge and improves profitability.

Big data helps MSMEs examine more data faster and more accurately than a team of people could do. It’s important to keep in mind competitors can also use big data to gain insights about a business. That’s why it’s crucial to prioritise investment in big data and stay informed about the latest technologies.

Although it’s impossible to prevent competitors from accessing business information through public sources, utilising big data offers a competitive edge and safeguards data. Despite business owners believing they lack the time to monitor analytics, learning how to use data to gain a competitive advantage only takes a few moments of study.

Big data can also be used to streamline business processes and pinpoint inefficiencies. Small businesses can use this technology to stay competitive and leverage customer data to understand their preferences, behaviours and needs. This information can be used to personalise marketing campaigns, develop new products and services and improve customer retention.

Today, financial data, product trends and social media analysis results can be accessed easily online, giving small businesses a better chance to predict what their competitors are doing. Although data is widely acknowledged for its advantages, only around 29 per cent of companies utilise it for predictive analysis or to enhance their operations, suggests a report by Accenture and General Electric, early movers stand to benefit.

Leveraging proprietary data for business purposes
In fact, many businesses may already have enough information to start a big-data initiative without even realising it. These businesses generate enough information to use big-data systems, including spreadsheets, databases and customer relationship management tools. In addition to real-time analytics dashboards, there are many big-data tools available for small businesses.

These businesses also have a wide range of sources that can be utilised to gather data for analysis, including email marketing reports, sales receipts, social media analytics, website analytics, streaming data from connected devices, publicly available data and data lakes. By leveraging these data sources and using data analytics, small businesses can make informed decisions, gain insights into customer behaviour and ultimately improve their performance and profitability.

Big data can also help small businesses optimise supply chain and inventory management processes. By analysing data on consumer demand, production capacity and logistics, companies can make more informed decisions about procurement, manufacturing and distribution. This can help reduce waste, minimise stockouts and improve overall efficiency.

One example of a company that has successfully used big data to improve its supply chain is Walmart. By using data analytics to monitor weather patterns, traffic and social media trends, Walmart can anticipate consumer demand and optimise its inventory management processes. This has enabled the company to reduce stockouts and improve on-shelf availability, increasing sales and customer satisfaction. Small businesses can also leverage data to achieve similar results.

Big data can also help small businesses improve customer service and support processes. By analysing customer interactions across multiple channels, companies can gain insights into pain points and take proactive steps to address them. This can help reduce customer churn and improve customer loyalty.

Big data has the potential to transform how small businesses operate and compete in today’s fast-paced, data-driven economy. While there are some challenges associated with implementing a big data strategy, including the need for specialised skills and infrastructure, potential benefits far outweigh the costs. As such, small businesses that invest in big data today are likely to reap significant rewards in the years to come.