Many small and medium-sized enterprises assume that big data and data science is something that mostly concerns large corporations. But nothing could be further from the truth.
Data science is all about using scientific processes, algorithms, and systems to collect and leverage insights from large quantities of data, which is highly relevant for all businesses today. SMEs operate in a dynamic and competitive market place, and need to use all tools available to improve and maintain profitability and competitive advantage.
Data science is an umbrella term for many methods used to make sense of noisy big data, both structured and unstructured. Data science, simply put, allows businesses to understand big data. And the companies that, regardless of size, learn to leverage data science in their operations immediately gain a competitive edge over those that don’t.
In today’s increasingly digital landscape, all businesses need to leverage data science to reveal patterns, identify trends, and make the most of different strategic investments. So that they can make the data-driven strategic decisions that will enable them to get ahead of the competition and drive growth.
Benefits of Data Science for SMEs
Data science allows businesses of all sizes to make decisions based on actual data, rather than gut feel, guessing, or “how we’ve always done things.” With a data science approach, you let the numbers speak and decide based on hard facts. This will allow you to improve everything from internal processes to the customer experience.
Informed pricing strategy
Pricing strategy is an essential part of the overall business strategy. And to make informed decisions, it’s vital to have a complete picture of both consumer behaviors and the competitive landscape. Achieving this without the help of data science is difficult and often impossible. Data tools help you compare your organization’s pricing to your competitors in real-time and make proactive decisions in an agile way.
Improved operational efficiency
Operational efficiency is key to reducing costs for small and medium-sized businesses. Using data science to mine and analyze big data allows companies to optimize processes, remove friction, and create better customer experiences. For example, data can show a webshop owner where customers are abandoning their cart in the checkout process, so this can be mitigated. Data can also reveal what types of content and ads perform best so that the business can invest most in the channels that yield the greatest ROI.
Data Science: 3 Practical Use Cases
Recommender and filtering systems
Data science can improve operations and products through filtering and recommender systems, also known as recommender engines. The more data or content involved, the more challenging it becomes to sort through it and find what you’re looking for. This is where a filtering system comes in handy, as it helps you cut through the noise and find the information you need.
Credit scoring systems
A different use case where data science solves a challenge is credit scoring. Credit scoring systems in, for example, webshops or online banks are built on a set of decision management rules to help evaluate the likelihood of buyers or credit applicants to fulfill payments or repay debts. Machine-learning, AI, and advanced algorithms help companies make informed and data-driven decisions in these scenarios. Performing these evaluations manually would not be feasible, but data science offers a convenient and scalable solution.
Fraud detection systems
Frauds represent a real threat, and a high cost, for many companies. Any company processing financial transactions of any kind is at risk and needs quantifiable ways to detect and prevent fraudulent transactions. This is a critical use case for data science, where AI and machine learning can help detect deviations that indicate fraudulent behavior.
There is no minimum size for benefiting from data science. The world we live in today is digital, and big data is the representation of that world. Companies who learn to use data science to leverage big data will be able to make the best strategic decisions and outperform their competition.