“Business executives have a gut sense that there’s money out there in data,” says Forrester principal analyst Brian Hopkins, and there’s more and more data flooding into enterprises all the time.
According to Forrester, the data available to businesses — from Facebook “likes” to natural-language Tweets to geolocation applications on mobile phones to sensors on pallets of goods or stuck on truck engines — hit one trillion gigabytes last year in the public web alone. IDC recently forecast that the Big Data technology and services market will grow to about $17 billion by 2015, seven times the growth rate of the overall IT market. All this data can quickly become overwhelming, even as the cost of collecting and storing it comes down, thanks to data-center virtualization and the almost unlimited storage capacity of the cloud. In the face of all this Big Data hype and hubbub, the question organizations must ask themselves is, as KPMG principal Thomas Keegan says, “How do you know what’s important?”
What’s important to Terri Deane, vice president of treasury for Maines Paper & Food Service, a distributor with close to $3 billion in annual revenue, is managing the spend for Maines’s fleet of trucks in a more granular manner. That helps the company make the best use of its vehicle- leasing agreements and improve the fuel-consumption rate of Maines’s fleet. In other words, for Deane, Big Data is “all about the bottom line.”
Accordingly, in late 2010 Maines met with Fleet Advantage, a fleet-management company that micromanages Big Data, much of it retrieved from sensors on trucks, to make it small enough to turn into information that can enable its customers to lower the total cost of ownership of each of their vehicles. Fleet Advantage does so primarily by improving fuel economy (both by physically configuring tractors and trailers and by providing feedback on driver performance) and by lowering the overall maintenance costs of its customers’ fleets by gathering and analyzing data to make the best use of vehicle life cycles.
“A company in New York thought it was getting great fuel economy,” says Fleet Advantage president and chief executive John Flynn. “We downloaded data from half a dozen engines in their fleet and found out their drivers spent about 40% of their time in ninth gear so they could accelerate faster. That was costing the company about 0.2 miles per gallon.” That may not sound like a lot of money, but when it’s multiplied by all the fuel a fleet consumes, it rapidly becomes significant.
Flynn is literally doubling down on Big Data to grow his privately held company. “We have about seven people who do fleet analytics and software development. We’re going to double that in the next 12 months,” he says.
According to Flynn, to date Fleet Advantage has helped Maines reduce its fuel consumption by 12%, an annual savings estimated at $800,000. Flynn believes that as Fleet Advantage’s engagement with Maines increases, that could rise to approximately $1.5 million to $2 million per year, with the added attraction of significantly reducing Maines’s carbon footprint. Fleet Advantage has also provided Maines with a web portal that enables it to monitor the performance of all its vehicles, access a monthly fuel-economy report, and track its lease agreements.
Maines’s Deane loves the portal. “The portal gives every single division all the data at its fingertips,” she says. “Everyone’s looking at the same thing, which improves collaboration and internal reporting.”
Payment processing has sped up. “What’s good for me,” Deane continues, “is the portal allows me to see all the leasing documents, so I know how much we’re paying each month. What we do is take those schedules, give them to accounts payable, and set up recurring payments. It only needs to be set up in the system one time.”
Along with this gain in efficiency, which Deane says allows her to do more with the same staff while growing the business, being able to manage the leases with greater granularity allows her to improve the bottom line. When a vehicle is leased, she explains, the maintenance cost is bundled into the overall cost of the lease, divided equally by the lease term, and paid out at a flat rate.
But maintenance expenses for vehicles are low at the beginning of a lease. “It’s new,” she says. “What’s to repair?” But they rise thereafter. By gaining a better view of every piece of equipment in the fleet and where it is in its life cycle, says Deane, “we can stagger costs, lowering maintenance on the front end of the lease” where it’s not needed.
It saves money on the back end by running the vehicles for fewer miles and exchanging them earlier, she says. That way, Maines also saves money on fuel (newer trucks are more efficient), and gains better residual value on the unit when it exchanges it for a new one. “When we got rid of stuff before,” she says, “it wasn’t worth much.”
“There’s a lot of data out there,” says Richard Sharpe, CEO and founder of Competitive Insights, an analytics provider focusing on using Big Data for supply-chain management. The key advantage of Big Data for CFOs he says, is helping them “gain visibility in ways that are game-changers.”
Or, as Deane says, “The devil is in the details, and we’re very into the details.”
Which makes Maines smart little devils.