How leasing companies can reap the benefits
Published on Oct. 1, 2013
By Mitch Kaufman, MSCS
President, IFS Technology Solutions
Everybody’s talking about BigData, that ubiquitous buzzword meaning data that has grown so massive, it’s difficult to process through traditional tools. These voluminous datasets have ushered in a new generation of database, semantic analysis, hardware platform technologies – and lucrative jobs. According to an article in USA Today, data analysis is one of the “sexiest” career paths of the 21st century!
But is BigData just big hype? What’s in it for leasing companies? Let’s take a look.
Understanding the new technology
Unlike most technology terms that refer to solutions (e.g., the Cloud), the term BigData refers to a problem. Vast amounts of data containing little if any structure, and the need to extract insight from the data, are the hallmarks of the BigData problem.
Traditional database technology is designed for “structured data,” the type of data used by lease management systems. Specific information is stored based on a methodology of columns and rows. It’s searchable by data type within content, understood by computers and organized for efficient reading.
BigData solutions bring us a new type of database technology, sometimes called NoSQL, that supports “unstructured” data. With no identifiable structure, unstructured data – ranging from documents and emails to digital images and social media posts — doesn’t have a predefined data model or doesn’t fit well in relational tables. A flexible technology, NoSQL easily accommodates new data types, efficiently stores unstructured data, and scales to the size of the data sets used by most leasing companies.
Considering the outsourcing option
You can incorporate BigData into your leasing operation in several ways. The simplest is to outsource data aggregation and storage. Companies such as GNIP and Datashift do just that. They create their own BigData repositories of social media data, consolidating information from Facebook, Twitter, Google, Blog Posts, YouTube and others. You can then create filters to access this data, as you would your own private data source.
These companies also offer developers application programming interfaces to facilitate integrating this BigData into existing lease management systems. This could help transform how you enter into and review new vendor and broker agreements, along with underwriting new applications and managing portfolio risk.
Whether your lessee is an individual or corporation, you can likely find a plethora of information about them in social media. Facebook posts can unmask personality traits that make it too risky to extend credit to an individual. Twitter can reveal what’s trending about a corporation, quickly exposing derogatory details that could potentially impair a corporate balance sheet.
It would be nice to allow a credit officer to review this information before adjudicating a deal. Wouldn’t it be helpful to know that several Dreamliner aircraft experienced mechanical failure on the very day you were reviewing a 100+ MM Boeing transaction? This type of data could also be fed into an automated credit scoring system as another dimension to help score an individual or company.
Making informed decisions
More than the individuals or corporations themselves, other factors related to industries or geographic regions can facilitate decision-making in real-time. A natural disaster in a region or state could be detected in social media and then help credit officers and scoring algorithms make an informed decision on a current deal. Do you really want to lease equipment to an inn near Yosemite when it’s encircled by a massive forest fire? Similarly, wouldn’t your marketing department like to know when a current client is expanding into a new business? Targeted, proactive marketing could prove to be highly effective.
Many leasing companies source applications through vendor and/or broker channels. Analyzing social media data can help ferret out fraud and expose channel partner weaknesses. A vendor with a poor record of customer satisfaction will likely be taken to task on some form of social media, be it a blog, YouTube or Facebook. A grassroots movement against a particular vendor or product could easily swell into a national stampede, seriously impacting your portfolio’s performance.
Creating your own BigData repository
Along with using third-party sourced social media BigData, leasing companies can create their own BigData repositories. Building a large-scale data repository based on Hadoop – a leading open-source tool for BigData management – can require a significant amount of hardware and personnel to support it. The Hadoop learning curve can be steep for existing staff, and experienced resources are in short supply.
Some of these resource constraints can be mitigated by using such services as Amazon Elastic MapReduce. With Amazon services, you can start small and scale the system as your project grows, at a fraction of the cost of purchasing, running and supporting your own in-house system. Once you settle on the platform, what would your BigData repository look like, and how could you benefit from it?
Many leasing companies already use business intelligence systems to consolidate data and analyze trends in action. As Hadoop now moves into its second generation (Hadoop 2.0), business applications such as the MicroStrategy BI Suite are now certified to run on Hadoop. This will usher in a new generation of business intelligence systems that allow for easier loading of disparate data types (i.e., text-based documents and e-mail correspondence) and provide the tools to analyze this data effectively. Imagine a central repository of client and partner data that offers a truly holistic view of your evolving relationship with clients and partners.
Getting the full picture
Combining your own data with external sources such as social media gives you a 360 real-time, real-world picture of your clients and partners and the environment around them. Underwriting, collections and marketing all have the potential to benefit from analyzing this data.
Is BigData over-hyped? Of course. Is it all hype? Absolutely not. BigData solutions are real and offer your leasing company real-world benefits.