Democratizing analytics

Much of the analytics services are rolled out to the heavily funded startups and the companies that make it to the Fortune list. But what about bringing analytics to the 48 million small and medium businesses (SMBs) employing close to 81 million people?!

A traditional consulting model has high labor costs as they employ consultants to tailor solutions to clients. The high labor costs make services provided by analytics firms inherently expensive. The high prices preclude small and medium businesses the option of analytics and the ones that can afford the high fee, more often than not, do not see the return on that investment. For these reasons and many more, I have always dismissed the possibility of rolling out analytics services for small and medium businesses. But that changed a couple of days back when I realized that I was thinking it all wrong.

Image Courtesy: PurrMetrix

I incorrectly assumed that the traditional model is the only format in which the analytics services can be delivered. What if we can minimize if not eliminate the human involvement and package analytics into industry specific plug-in analytical products at a price point that is both affordable and sensible to small and medium businesses. Pick restaurants for instance. Survey a few and build reports that lend restaurants clarity on how their business is run. Try to work hands in glove with a couple of well known brands. Identify Top 2 or 3 problems that can be solved with limited data they collect. Build reports/dashboards on that and host them online. Charge them a subscription fee of Rs.3000. Give first month free. Give 3 months free if they refer. Urge them to collect more data. Provide free tutorials/content on your website on how to make sense of the reports and dashboards as support in things such as defining problem and making sense of results are lost when you switch to this model. Make it like a Menu where customers can order reports on problems relevant to them. Offer them flexible pricing plans with packages and la-carte options. Pick another industry and repeat.

To start, you just need a team of two. A data scientist and a sales guy. You do not need a big team as building products is a one time job. All you need to do is update them with the data which is pretty straightforward when the data comes in the format you built the product for. Your costs in this model are only on servers and hiring a handful of coders, data scientists and industry specialists. At 3000 bucks a month, you stand to make INR 36,000 a year from a business. Therefore, you stand to earn annual recurring revenues to the tune of 36 Crore if you can get hold of 10,000 customers (of the 48 million) in a 5 year period. Your server costs, marketing costs and labor costs will not exceed 10 Crore a year.

Of course, it is easier said than done. Barriers such as lack of awareness of value that analytics can provide and lack of data make it difficult no matter which industry you pick. But these barriers can be overcome in the long run. Lack of awareness breeds low confidence in analytics. This can be overcome by building credibility by working with a couple of well known brands in the industry and earning their testimonials. After this initial phase, you can automate the reports and make the framework available online to all. Scarcity of data is an issue but I heard that Government has made it mandatory for businesses to report a lot of data online for GST. Also, in the long run, when methods to capture data become inexpensive and business owner build trust in analytics, they can be expected to collect and store more data. Hence, may be it is possible to bring analytics to the small and medium businesses. Why should only the firms with deep pockets have fun with analytics?! Democratize it.

If you like the idea and want to discuss it, do reach out to me at!