‘Big data’ could help solve Canada’s productivity problem

2012-01-13T10:45:00.000-08:00

It is not news to any of us we have productivity issues in Canada. A report by the Organisation for Economic Co-operation and Development, released this spring, identified “sluggish productivity growth as the main long-term challenge” our economy faces.
In fact, not only has Canada lagged behind the major economies of the world in raising productivity, but we’re also grappling with a “D” in innovation and a competitiveness ranking of 12th out of 17 industrialized nations, according to the Conference Board of Canada.
Much of this malaise can be attributed to under-investment in research and development, a byproduct of a historical over-reliance on natural resources to drive Canada’s economic growth.
But there is a new, and perhaps even more valuable, resource emerging in today’s digital age, one that, with effective stewardship, has the potential to become the most important currency to help the Canadian private sector spark productivity.
Organizations are operating in a world of accelerating complexity and massively available information. In fact, the “digital universe” will grow to 2.7 zettabytes by the end of this year, up 48% from 2011, and rocket toward nearly eight zettabytes by 2015. A zettabyte is one sextillion bytes (one followed by 21 zeros).
The trillions of sensors embedded in devices we use daily, the 10,000 payment card transactions made every second around the world, the six billion records the average telco produces every 24 hours, Facebook’s 900 million active users, and even the 340 million tweets sent every day, are just a minute sampling of the myriad transactions and interactions that generate digital information. And we are only at the very beginning of this explosive growth in data.
Yet today, one in three business leaders tell us they make critical decisions without the information they need, and more than half say they don’t have access to the information from across their organizations to help them do their jobs well.
The harnessing, analysis and conversion of these data into knowledge represents the new competitive advantage in the drive toward productivity. It can help companies identify hidden insights to gain a comprehensive view of a customer, understand behaviours in real time, predict outcomes, make more informed decisions and move into new markets.

In fact, research shows analytically driven organizations outperform their competitors, delivering 49% higher revenue growth, 20 times more profit growth, and a 3% higher return on invested capital.
Data are industry-agnostic, and no industry is exempt from the benefits of analytic technologies. For example, as supply chains become more global, they grow more complex and difficult to manage. Our research shows 70% of supply chain executives surveyed ranked visibility as their greatest management challenge. At the same time, customer demands and expectations are increasing, and the prices of raw materials such as petroleum, nickel and copper are becoming more volatile. All organizations are looking for ways to increase operational efficiencies across people, processes and assets.
Deriving insight from data collected across the supply chain — including unstructured content from maintenance logs, websites, contracts, communications and emails — opens the doors for enterprises to gain a complete view of their operations, better deploy resources, manage assets, reduce downtime and optimize their inventory and supply chain management.
Happily, technology has advanced to the point where it is possible to crunch these reams of structured and unstructured data, with new supercomputers that can process in one hour what it would take 6.7 billion people (basically every person on the planet) 320 years to calculate using calculators. Analytics technologies running on clouds can integrate hundreds of systems and present relevant information quickly to hundreds of thousands of people. Software can mine information even the smallest organization generates, to illuminate opportunities to improve productivity.
Also happily, Canada is home to a critical mass of experts who develop applications to help companies harness the potential of business analytics. There’s been progressive work here to build a Canadian analytics competency. It’s a trend we should foster.
Already Canadian organizations who are embracing analytics are realizing its benefits. The Vancouver police are using analytics to mine data to better surface leads, deploy resources more effectively and improve public safety. Property crime rate per 1,000 population is down city-wide by 24%. Violent crime rates per 1,000 population are down 9%. The British Columbia Egg Marketing Board recently started to apply IBM analytics to the production of eggs in the province, a move that has reduced farm inspection workload by 66% and created an annual cost savings of more than $100,000.
Big data and analytics represent the new productivity battleground. Canada has lagged behind the major economies of the world for too long, and it’s time to shift our focus away from traditional approaches to productivity gains, embrace data as the valuable resource they represent and harness them as the 21st Century competitive advantage.
Les Rechan
general manager of Business Analytics at IBM

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‘Big data’ could help solve Canada’s productivity problem