The next big crunch facing Australian companies

Business once relied on the insights that came from a strong personal relationship between supplier and customer. The successful companies of the future will be those who understand the strength in numbers.

Just when you thought you’re on top of the major changes coming in Australian and global enterprises let me introduce you to a new change. And it’s as big as any that have gone before.

The groups that adapt to this new change will be the winners in the next few years. All of us are familiar with the material that comes from databases where by you discover roughly who is buying your product and service and how much they are spending.

Alternatively you will have data on production of goods and services and the costs involved. This information has helped a great many enterprises but the new era puts data into three dimensions and enables people to specifically target their actions to achieve the predicted outcome.

I was introduced to this new concept by Ian Toh, the Executive Director of Azurium (part of the Ferrier Hodgson accounting practice) but in the last few weeks I have actually seen it in action.

Many of you will know of my role in establishing a community partnership down at Anglesea in Victoria. The Anglesea community and the Victorian government funded a new CFA fire station and fire education centre on a one-for-three basis.

In the education centre, students from the Anglesea Primary School (with the help of their parents) are monitoring soil and moisture content over a large number of data collection centres in the area. They are being taught how to match this base data with models of wind, temperature and other weather conditions plus other factors so that when a fire breaks out in a neighbouring district their model will show where it will go and how rapidly it will spread.

The exercise is being carried out in conjunction with the University of Melbourne and, leaving aside the fire experience, the children are being introduced to the world of three dimensional data where you are not looking simply at static material but a three dimensional combination that enables you to take action. Similarly, retailers will be able to determine the purchasing patterns of their customers and work out what triggers an individual’s spending. So when you pull the demand trigger you will make sure you have the stock available.

Suddenly all those participating in the retail goods chain will have customer knowledge akin to old time shopkeepers who knew exactly what their customers wanted.

The efficiencies this will create in supply pipelines and stock management will be dramatic. But three dimensional data or analytics, as it is called, will apply to a far wider area of activities.

An accountancy, legal firm or bank will be able to determine how they should structure their business to produce the outcomes their customers actually want.

The subject of analytics is not widely understood in Australia. Ian Toh did a lot of work at Wesfarmers before joining Azurium/Ferrier Hodgson and there are no doubt many others working on this. But in 2014 when you read the directors or chairman’s remarks on profit announcements look for an understanding of this new era because those companies that get it right will have an enormous advantage over their competitors.

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