The PROS and cons of big data for manufacturers

August 9, 2012-

Big data is an area that seems almost recession-proof. It has seen incredible growth as companies feeling the pinch turn to big data companies to give them the competitive edge.

But what exactly is big data? And how can the average manufacturer use such vast swathes of complex data to its advantage? TM’s Kimberley Barber caught up with Tim Girgenti, Chief Marketing Officer at PROS to find out.

PROS has been around for more than two decades and has reported quarterly revenues up 18%. Last year the pricing and revenue management software company reported revenues up nearly 30% year on year, despite the global economic turmoil.

Originally set up to focus on the travel sector, helping major airlines like Lufthansa competitively price their seats, PROS turned its sights to the manufacturing industry with unprecedented results.

Mr Girgenti explains: “Eight of the ten most profitable airlines already use our technology. We have been doing that since 1985, we are the original big data company. There’s no more complicated model than what the airlines deal with. They use big data to forecast demand for a given seat at a given price point. About seven years ago we identified a need for business to business manufacturers to do the same thing.”

Big data has become something of a buzz word in recent years and its conversion for use in everyday business has opened it up to other industries. In fact, the manufacturing, distribution and service industry now comprises more than 50% of PROS revenues.

Mr Girgenti says: “In just seven years, we have eclipsed what it took us two decades to do in the travel sector. Our demand and growth are with manufacturing companies as they look for smarter and better ways to sell their services using data.”

Mr Girgenti enthuses about how their services can be used by manufacturers to ensure they pitch products at the correct price level and get the most value out of them by protecting margins. Last year, a study conducted by Simon-Kucher and Partners, confirmed the need for big data in the manufacturing sector, concluding that weak pricing cuts manufacturing profits by 25%. The study also found that 65% of manufacturing companies were not able to charge the prices they deserve in comparison to the value of their products. With instant access to millions of data points, Mr Girgenti sees big data as a ‘levelling of the playing field’.

He says: “The way I like to think of it is; it is all about odds. With every sales person that goes out [to pitch a product] there is some degree of likeliness they are going to win the deal. We are stacking the odds more in their favour. In the past, procurement had the advantage, now with big data the sales person can negotiate on real terms.”

Some of the companies that use big data don’t always want to talk about it – preferring to keep the fact close to their chests and ensuring the upper hand in a competitive market. Kimberly-Clark Professional (KCP) is just one big name that has recently announced that it will be using PROS for data analysis. Other major companies such as BASF and Navistar are quite open with their use of big data.

KCP European Pricing Lead Phil Hall, explains why they chose PROS over other big data companies: “We selected PROS based on its industry experience, product capabilities and people. PROS’ complete integration capabilities with SAP and its partnership approach demonstrated a thorough knowledge of our requirements.”

Historically big data was more IT infrastructure orientated, but as PROS has applied big data to a real business application, they have seen their revenues soar. The growth has not been limited to the UK and USA, PROS has extended its global reach into over 50 different countries.

Mr Girgenti explains why: “The problems we solve are universal problems. Every company wants to sell better and outperform their competition; our story to the world is; let’s look to the data and let the data tell you how to make smarter actions.”

With the capabilities and applications of big data expanding each year, it seems we may well be on the brink of a new age in big data.