Dilbert, the cartoon, is often a reliable guide when looking for perspective on all things corporate. Take this slice of life from an excerpt of Scott Adams’ comic strip on August 24, 2010:
Boss: I need you to delete all the unnecessary data from our servers to make room.
Dilbert: Technically it’s all unnecessary because our decisions are always based on flawed logic anyway.
The great thing about Scott Adams (aka Dilbert) is that he shows us the humor in our collective ignorance. In this comic strip, ignorance is portrayed by the boss and it becomes funny when Dilbert points it out. For those of us who live in the real world, we acknowledge the ironies of our corporate existence and then press on (hopefully, a bit wiser having read a Dilbert cartoon). Fortunately, the wisdom of Dilbert doesn’t take the wind out of our sails; it helps us ‘hang in there’ with the knowledge that things can be better.
It’s decision time!
The problem with making decisions, at least making decisions based on accurate and current data, is that we seldom know when we will be asked to make a decision. How often has someone stopped you as you strolled past his or her desk and demanded a decision right away so they can move ahead with a project or activity? In situations like this, most people recognize there is a legitimate sense of urgency and feel obligated to help out a colleague or subordinate. To keep the wheels of progress grinding along, the asked-for decision is frequently made based on gut-level feel and minimal knowledge of the situation, but work is uninterrupted.
Not surprisingly, decisions made in scenarios like the one above often lead to less than optimal outcomes. There is proof to support this observation. MIT Sloan Professor Erik Brynjolfsson and his colleagues Lorin Hitt and Heekyung Kim analyzed 179 publicly-traded firms and found that there was an increase of approximately 5% in productivity and profitability when decisions were made based on data rather than gut-level feel.
Think about that for a moment. Increasing productivity and profitability by 5%, when dealing with millions of dollars and thousands of people, is a gain worth pursuing. But, is the converse of this statement is true? If making data-driven decisions yields a 5% gain, then does using gut-level decision-making lose 5%? The answer is no because gut-level decision-making is the norm. Gut-level decision making has been and still is the baseline from which data-driven decisions show 5% improvement.
What does this mean?
It means that decision-making is fundamentally changing. For decades, we placed a higher value on speed over accuracy when it came to making decisions. With the new in-memory computing technology and enormous amounts of granular data (Big Data) we can now have both speed and accuracy. All we need to do is incorporate data-driven decision technology and disciplines into our daily lives…our walk-around the office, waiting at the airport, or sitting on the beach, daily lives.
It also means there is a tremendous opportunity for organizations to make substantial improvements in performance by refining how decisions are made. According to Eric Brynjolfsson, “there is a lot of low hanging fruit for companies that are able to use Big Data to their advantage.”
The combination of Big Data and Data-Driven decision-making will change the trajectory of corporate efficiency and capability. If the business world is leveraging the ‘current technology’ to inch its way up a progress curve, then using the new technology with unlimited amounts of data will increase the slope of that curve by 5% or more. For companies that remain on the current, but aging technology platform, the future could be a very disagreeable place.
SAP HANA and Data-Drive Decisions
SAP HANA with in-memory computing is the next leap forward in high speed data processing. In fact, this leap goes beyond anything we’ve ever experienced because HANA is a single appliance that combines software, hardware and a database. The components are optimized for speed and to work with the human mind in a ‘speed of thought’ environment. Quite simply SAP HANA is the breakthrough that will lead all organizations to make more data-driven decisions.
Business leaders and senior management want real-time information so they can analyze market situations and react to rapidly changing customer needs. This isn’t just marketing spin either; it is a reality that is taking hold more every day and will eventually touch each person on the planet. Real-time information, once just a dream, is fast becoming a reality and soon we won’t be able to live without it.
In an interview with Steve Lucas, Executive Vice President and General Manager for Database and Technology at SAP, he discusses two breakthrough examples where SAP HANA plays a pivotal role. The first is a very large retail store that uses to SAP HANA to get closer to its customers. The store has HANA configured so that when a customer checks out using a credit card, that individual is immediately identified in the system, and his or her buying profile is analyzed based on previous items purchased. This technology enables the clerk to see the profile and mention an item that is known to be of interest to that customer and let the customer know if it is on sale or going to be.
The second breakthrough scenario is integrating SAP HANA with other technologies. Mobile technology is fast becoming the most useful way to access HANA. A large electric utility has enabled SAP HANA to work with an iPad in the field. The technician can simply point his iPad at a transformer in need of service and instantly all the schematics, diagrams, and instructions needed to service that transformer will be downloaded to the technician’s iPad.
Leveraging cloud computing
To end this blog post, we need to spotlight the equally noteworthy advances in technology that have come with cloud computing. Using ERP systems as an example, SAP cloud hosting has opened the doors for many organizations to tap the capabilities of SAP that have long been available only to giant corporations. SAP HANA is among those capabilities that are now accessible to small and mid-sized businesses. New technology can be intimidating and installing a new system is often beyond the skillset of many IT departments. However, outsourcing the SAP HANA appliance into a cloud environment is now a cost effective and viable option.
What would Dilbert do?
The incredible new technology coming into play is no joke. Big Data, data-driven decisions, cloud computing and many other advances are pushing corporations to solve problems in real time, anticipate customers’ needs better, innovate rather than imitate, and work smarter. Dilbert will have fun with this new technology, but he will certainly be on board and guide us with pithy insights and humorous observations.