The role of data in digital transformation
1. The role of data in digital transformation
Organizations have access to data like never before. This includes both internal information, called first-party data, and external information, which is usually data about customers and industry, often called second or third-party data. As organizations have digitized their operations, many types of business data have become available, including information about their customers. First-party data is the proprietary customer datasets that a business collects from customer or audience transactions and interactions. These datasets might include information about digital interactions, like the length of time a user spends on a web page. Second-party data often describes first-party data from another organization, such as a partner or other business in their supply chain, that can be easily deployed to augment a company's internal datasets. The organization does not directly own this data, but it’s relevant to their business. Finally, there’s third-party data, which are datasets collected and managed by organizations that don’t directly interact with an organization's customers or business. These datasets might come from government, nonprofit, or academic sources, like weather or public demographic data, or from industry-specific sources like analyst reports or industry benchmarking. Third-party data is often shared or purchased on data marketplaces or exchanges, such as the Google Cloud Marketplace. Using external data can greatly increase the value of data by providing new context and insights. Let’s explore an example of how an airline transformed their business through data. Budget airlines don't provide food as part of their service. Instead, they charge customers for meals if they want them. This solution might seem cost-effective, but it can be difficult to estimate the number of meals required onboard. If the airline overestimates the number of meals needed, they risk wasting food and losing revenue. But if they underestimate, they risk selling out of food; providing poor customer service and losing potential revenue. One budget airline in Asia reimagined how they could solve this problem by using data. They began by identifying factors to help estimate stock, such as the size of the plane and the number of passengers. But they soon discovered that estimates based on these factors were inaccurate. This meant having to think about their data differently by analyzing information such as destination, time of flight, and flight connections before and after each journey. Using this information, they uncovered actionable insights. For example, they learned that flights to and from India required 73% more vegetarian meals. With these new insights, the airline was able to predict the number of meals required more accurately, which in turn provided a more positive customer experience and improved the profitability of their food service. This is just one example of how cloud technology can unlock new value by reimagining data. No matter where you are in your company, you too can use data to solve challenges.2. Let's practice!
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