Digital data is everywhere these days and the scope to use analytics to boost productivity, streamline processes, drive quality and improve experiences is fast becoming ubiquitous across virtually every industry.
‘Analytic technologies allow companies to collect, organise and make sense of this growing pool of data, adding value to both their customers and their own operations,’ says Hugh Yarrow, fund manager at Evenlode Income (GB00B42KPP53).
Technology companies are obvious candidates to blaze the data analytics trail, and there are many on the London stock market. Larger software designers such as Sage (SGE), Fidessa (FDSA) and AVEVA (AVV) are using analytics to improve accounting functionality, financial trading intelligence and large construction project design respectively. Then there’s Tracsis (TRCS:AIM), with remote rail infrastructure kit and crowd monitoring tools, or Attraqt (ATQT:AIM), helping retailers improve stock supply controls and online customer experience.
Malaysia-based Fusionex (FXI:AIM) has developed its own data analytics platform GIANT, being used by engineers, hotel chains, financial institutions and many other businesses.
This trend is becoming increasingly difficult to ignore, especially since data analytics demand extends far beyond the bounds of the software space. Retailers, consumer products suppliers, professional services, healthcare, entertainment - data analytics is increasing right in the engine room of such industries. And that’s why investors need to know how data analytics may be impacting shares in your portfolio.
90% of all data today has been created in the last two years
Here are three ways data analytics is transforming business:
Consumer goods
Supermarket chain Tesco (TSCO) may have been among the frontrunners in recognising the value of data with its Clubcard, capable of pitching offers to shoppers based on previous purchases. So even low-ticket branded goods, like shampoo, soap or drinks are being adapted to the data crunching world of digital marketing, social media and online sales.
‘Diageo (DGE), for instance, is increasing its North American digital marketing expenditure five-fold this year,’ says Evenlode’s Yarrow. ‘At the same time, these companies are increasingly utilising data analytics to run their own operations, improving efficiency, management information and customer feedback loops.’
Unilever’s (ULVR) IT system processes 30,000 transactions-per minute-throughout its value chain and can produce real-time demand planning, raw material price management, product costing and cash-flow forecasts.
How much data is created everyday?
2.5 exobytes
Equivalent to...
Media
Sectors such as law, accountancy, financial services and academia are increasing tapping the vast potential of digital analytics, and have been for several years, and so too are media organisations.
‘Several Evenlode holdings provide digital offerings in these areas,’ explains Yarrow, such as event organisers and publishers Informa (INF), Relx (REL) and newspaper firm Daily Mail & General Trust (DMGT). Each is seeing steady demand growth from customers.
Supplying digital products to professional service customers also produces attractive economics, such as reliable subscription-backed revenues, predictable cash-flows and good customer loyalty, according to Yarrow.
Data has become crucial to these business models and increasingly sophisticated products that harness machine learning and big data technologies that can add extra customer insight are being developed.
‘Relx, for instance, now employs 7,000 technologists, such as data scientists and software developers, a quarter of the company’s total workforce,’ the fund manager explains.
Healthcare
Digital innovation in healthcare is becoming increasingly widespread. Pharmaceutical companies are harnessing the field of bioinformatics, which uses software algorithms to interpret biological data. Complex things like the human genome, for example.
At the same time, IT and software service supplier like EMIS (EMIS:AIM), Ideagen (IDEA:AIM) and Kainos (KNOS:AIM) are helping the digital transformation of the NHS. It’s a slow process but the willingness to use data analytics to improve services and patient outcomes is there, even if the central funding isn’t always.
Evenlode’s Yarrow has another good example, in medical devices. ‘Smith & Nephew’s (SN.) Navio robotics products use software analytics to construct three dimensional models of knee joints,’ he explains. ‘This equipment helps knee surgeons perform their operations more quickly and more effectively.’This sounds like a truly digital extension of the company’s existing product ranges built on years of cutting edge orthopaedics design expertise and close relationships it has built with surgeons.
