Big Data Opportunities and Challenges: A Spotlight Q&A with Rod Johnson of Oracle
by Ron Powell
Originally published December 14, 2012
This BeyeNETWORK spotlight features Ron Powell's interview with Rod Johnson, Vice President of Industries Strategy, Industries Business Unit at Oracle. Ron and Rod discuss Oracle’s recent study that looked at the big data challenges in various industries, and Rod shares some of the interesting results.Rod, Oracle recently completed an industry-specific study on big data. Could you tell our audience why Oracle conducted this study and who was included in the study?
Rod Johnson: We spoke to 333 executives across North America, across 11 industries, and it was mix of about 85% business executives – CEOs and CFOs – and about 15% IT executives. The focus of the study was to understand the real implications of the growth of data. Based on the study, the data had grown 86% over the last two years. We also wanted to learn how organizations were preparing to leverage that information in their business and the specific focus areas industry-by-industry where they saw the most significant challenges and opportunities.
Let’s tackle the last part of that. Where are the biggest data growth areas within organizations?
Rod Johnson: When it comes to big data, the biggest growth is in data coming from the Internet and social networks, and the massive amount of data coming from sensors and devices, whether that’s the smart meter in the utility space or all the sensors on an oil and gas rig. In the oil and gas markets, there is a massive explosion of this type of information that’s now available to companies. In the customer area, the biggest area of growth over the last two years is around all types of customer information – weblogs on customers, social data on customers, and transaction data on customers. Other areas are operations, and sales and marketing. Companies really see those areas continuing to be the big growth areas in the accumulation of data.
Rod, do you think executives are prepared to handle this increased data and what could they do to be better prepared?
Rod Johnson: About 60% of the executives gave their organization a grade of “C” or below in their readiness to leverage this data. About 30% gave their organization a “D” or an “F.” So the vast majority of executives see that their organization is fundamentally unprepared to put this wealth of new data to work to address challenges in their business. Some organizations are still struggling with even the basics: Twenty-one percent said they're still struggling to secure and safeguard the information, and 33% are struggling just to capture it. Obviously, you can't turn data into analysis unless you are able to capture it and put it in a system where you can store it.
There are two significant challenges where organizations gave themselves a grade of “C” or below. The first one, identified by 48% of respondents, is translating information into actionable intelligence. In other words, they have the data, but they have to make usable by converting it into the proper format and putting intelligence on top of it to enable business people to make decisions. Number two, just slightly behind at 47%, is distributing the information in a timely manner. So they have the information, but they can't get it to the business manager or the business analyst in time to make a decision that's going to impact the business positively.
I think the most compelling finding from the study is that when they look at their inability to leverage this data, they’re making a direct correlation to the revenue side of their business. On average, the 333 executives said they're losing 14% of revenue by not being able to mine this intelligence and make good decisions on how they take products to market, how to acquire customers more effectively, or how to better promote their goods and services to the market.
Are executives prepared to handle the increased data? What can they do to be more prepared?
Rod Johnson: Any good strategy spans people, process, and technology, and 97% of the executives surveyed said they have to make investments and they have to make changes so they can leverage their data. Everyone is aware of this opportunity and challenge.
They are just not sure how to proceed because there are a host of new capabilities that need to be built. These executives recognize that there is a general infrastructure systems gap, and their top priority is getting the right systems in place to gather the information.
They also identified the need to make the information accessible to the business managers. They need to have more business analysts able to churn through and mine this intelligence to find the actionable insights and then be able to get it to business managers. This also has IT implications because of the need for better tools, better analytic applications, and better business-centric solutions so that more of the managers in the company can mine the information.
The third area is that the systems they're using were not designed to meet the needs of their specific industry. One of the areas we highlighted in the study is the industry-specific opportunities, industry-by-industry. An example from our customer base is Toyota. A few years back, they were having an issue in North America around the unintended acceleration of some Toyotas. They had to put a whole new infrastructure in place to be able to quickly mine the data and determine what was really happening. The answer to that question was a very difficult one because they were getting some information from their dealers based on warranty claims and they were also getting information from governmental agencies. Additionally, there was some information from social networks, information from their own internal systems – the quality management systems, the manufacturing systems and the dealer interaction systems. They needed to pull all this information together to figure out what was going on. In the end, it turned out that they really weren't having an unintended acceleration issue. The new Oracle infrastructure they put in place enabled them to do all of the analysis on this very unstructured problem involving a huge variety of information sources to get to the truth of what was going on with the quality of their vehicles. That’s an example of a very industry-specific challenge. Just providing a generic toolset or generic system is not really going to address the industry-specific needs of companies.
In healthcare, these needs are around integrating clinical and patient data, in utilities the needs are around smart meters and more effective demand response to energy consumption patterns, and for airlines it's around passenger data. In other words, these needs are very industry specific and so are the tools that enable them to capitalize on the opportunities the data can provide.
Looking at infrastructure, what do they need to have to handle big data compared to the infrastructure that they’ve had over the last 20 years?
Rod Johnson: Well, the biggest change is that a lot of the new information is unstructured. The unstructured data could be Twitter content or some other sort of purely unstructured text coming from any comment field in a system or Facebook. If you're a marketer, you obviously want have all that information. Then there's this sort of semi-structured data that comes from sensors, meters or web logs. That data has some structure to it, but it's not purely structured. It’s a difficult challenge to get all that information into a format where you can do analysis on it. So the biggest change that we see is a lot of adoption of new techniques in software and tools to bring all of that information into a more structured environment where it can fit into the typical business intelligence infrastructure.
Oracle has a variety of technologies and tools but the big product we've launched recently is a big data appliance based on the Hadoop open source, which provides a lot of the MapReduce functionality to bring structure to unstructured data.
We also acquired Endeca, which provides a tool for information discovery, bringing a lot of different data sources together in terms of finding that needle in the haystack.
There have been a lot of changes in terms of both the methods and also the tools that you need to deal with semi-structured and unstructured data.
What are some of the industry-specific trends that you saw in the survey?
Rod Johnson: What I found most interesting is that new tools, new techniques, and new data sources solve very old problems – old challenges that really plagued most industries in terms of revenue and cost. This affects healthcare, for example. For decades, we've been talking about integrating patient information, medical records, and clinical data. It’s the key opportunity. What's happening is that the technology to manage and integrate all these unstructured parts of a medical record or a clinical care dataset has come together. It, thus, has become easier and more cost effective to integrate that.
And on the other end, advancements in processing power enable us to do things – at an economical level – that we couldn’t do in the past without assembling several mainframes to do the work. It’s a combination of the economics and the new technology that enables us to address long-standing problems in the industry that can yield massive benefits. If we can do a better job of analyzing patient data and understanding the cause and effect of different treatments, different services, and different outcomes, we can dramatically increase the quality and cost of care. That requires bringing a variety of different sources together to gain those insights.
Field operations in the oil and gas industry is another example. Every offshore rig generates a terabyte of data a day from the thousands of sensors that are checking the temperature, the pressure and the flow of the different pipes and instruments on a rig. By analyzing that real-time data, they can optimize the drilling process, and also improve the productivity and safety of the oil and gas field.
These are long-standing problems that new technologies enable us to solve.
Rod, we've really covered a lot in our discussion today. What is the top-level priority of executives pertaining to big data right now?
Rod Johnson: Well, number one is to make the information actionable. We now have it, and we know we're storing it, but how do we make it actionable? If we make it actionable, we can capture revenue and better manage costs.
Are there any particular industries that are taking the lead from a big data perspective?
Rod Johnson: The three industries that rate themselves the best in terms of their preparedness to leverage big data are consumer goods, communications, and financial services.
The consumer goods industry has always been a very data-intensive industry, and their core mission is consumer behavior – understanding what mom wants when she goes in the store, how she shops, where she shops, and what things can be done to influence that behavior. They've been collecting and mining data for decades. Thus, they already have a huge amount of infrastructure and people talent around data.
At the other end of the spectrum, the industries that rate themselves the worst in their preparedness are the public sector, healthcare, and utilities. It's a statement of business maturity and priorities. Most of those industries have lags in investment in enabling technologies. First, you have to have put many of the systems in place – the transactional and operational systems – before you really can begin to mine intelligence. That lag in overall IT investment puts them further behind when it comes to being ready for big data.
We’ve witnessed a lot of changes in IT over the years, and those changes have impacted the business in a variety of ways. How does the big data phenomenon compare to other major shifts in technology over the last 30 years.
Rod Johnson: Of all of the major IT evolutions or shifts over the last 20 to 30 years, big data offers the most value to the business users. Moving applications from client/server to the web made it easier for IT to manage and deploy systems. It didn’t really have a big impact on business users. Big data technologies provide the ability to harness what the consumer is doing, to take in real-time information on how they're responding to various offers, and – if you’re a utility company – to understand what's going on in all of your consumers’ households in terms of energy use.
The power of that information for the business makes it one of the most important technology evolutions we’ve seen. This evolution provides true business benefit while many of the others were technology innovations with largely IT benefits.
I agree with you. This shift really does have the ability to give the business far more insight from all this data that they've had for years and years but they've never really been able to harness because it's so big. That makes a lot of sense. Rod, I really appreciate you taking the time to talk to us today about Oracle’s recent big data study.
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