Data as a Competitive Necessity

Adapt or Die

To date, I have not found adequate words to accurately convey the criticality of the role of data in moving through the decision cycle in the 21st century business landscape. Perhaps this serves as further illustration of the pervasive failure of companies to recognize the importance of data. Thus, the genesis of this essay finds its roots in my frustration, as I see far too many organizations viewing their data management through an archaic lens.
An interviewer recently illustrated this, telling me, "We’re in the business of moving boxes, not data." Wrong. EVERYBODY is now in the business of moving data; otherwise, you are not going to be in business much longer. Am I predicting that there is going to be an overnight apocalyptic event where a firm will have to shut down? No. However, from my perspective, Blockbuster going from a movie rental giant to a single store remaining in the U.S. happened pretty much overnight compared to the decades-long decline of other businesses from the 20th Century that failed to adapt to new technology.
On its surface, the story of Blockbuster is not about data. Blockbuster had an opportunity to acquire Netflix and they passed. The CEO of Blockbuster failed to understand the strategic picture of the future of how people would be renting movies. However, the story of how Netflix beat Blockbuster is most importantly about their ability to harness data beyond traditional rearward-looking business intelligence applications. A great example of this is the story behind how Netflix uses data to give viewers what they want, bearing in mind that the article linked is from 2013.
Big data runs on open source software. I will be the first to admit that a business model where you give away the software and sell support is difficult to pull off. Red Hat seems to be the only firm doing that well. Other firms are struggling along, while still others have moved to a mixed model where they give away an open source version but sell and support an enterprise-grade version of their product to commercial customers. While challenges exist, software firms will have to figure it out because the easiest cost analysis to do is looking at what you are paying a year in software licenses compared to what you pay for an open source alternative. The money saved from SQL Server licenses alone could be $20,000 a year and up, depending on the size of the organization.
From the mouth of a CIO, I heard, “We’re a Microsoft shop.” Wrong. Microsoft is not the future of data. Microsoft really fumbled on this one. With all of their resources, they have failed to take advantage of the rise of the importance of data due to their long-standing hostility towards open source. Because of this, companies continuing to embrace Microsoft technology to manage their data will find themselves further and further behind their peers who have embraced the open source movement.
It is not just that open source software is free. The key ingredient is that the software is based on a distributed computing model. Scalable cheap computing is the future of data management, not some $500,000 appliance that you sell to customers because you got left in the dust and are now trying to keep pace.
In addition to my Air Force background, I am also a professionally trained race car driver. I often have to explain to the uninitiated that races are not won in the straights; they are won in the corners. You might win the drag race, but if you brake early and apex late, the other guy or gal right on your six is going to eat your lunch. You win races by gaining a millisecond here and a millisecond there. 300 laps later, you are so far out in front, nobody is going to catch you. So it goes with business.
The racing metaphor is especially apt for those businesses in mature industries with many competitors. In most professional racing series, the cars are standardized and the difference comes down to the skills of the crew and the driver. During a race, telemetry is streaming back to the engineers on the car’s performance in real time. This stream allows them to make mid-race changes to the car set-up. The technology exists to stream business data in real time, yet many firms are still married to old school batch processing. This is yet another way in which companies are losing competitive advantage due to not adapting to the changing environment.