What do Domino’s Pizza, Inc. (NYSE:DPZ), International Business Machines Corp. (NYSE:IBM), and Union Pacific Corporation (NYSE:UNP) all have in common? More than you might think. All three of these companies are implementing business analytics software to increase customer service, make smarter decisions, and drive costs out of their businesses.
There are thousands of gigabytes of data generated every day, from a multitude of sources. These sources could be anything from the number of times an ad is clicked, to the speed of a railroad car over a certain track, to the traffic patterns in a congested city. All of this is well and dandy, but the data is useless unless there is a way to structure it.
Enter International Business Machines Corp. (NYSE:IBM)’s Watson. Watson is a computer program that is best known for beating two Jeopardy! grand champions in 2011. Watson is a essentially a computer program that is part of a growing artificial intelligence wave that is growing in tandem with the amount of data that we have. Watson is much more than the Siri program that powers search on your iPhone. Watson actually breaks down human language to try and answer the question posed to it, as opposed to matching words you type in.
As all of these companies generate massive amounts of data, they will need more help from computer programs like Watson to decipher it and turn it into action. International Business Machines Corp. (NYSE:IBM) will benefit directly from this next wave in computing by selling its servers and analytics software to companies, and then charging a subscription fee to keep the clients’ software up to date.
Effective marketing dollars
Domino’s Pizza, Inc. (NYSE:DPZ) is one of the success stories when it comes to marketing dollars spent. Domino’s Pizza, Inc. (NYSE:DPZ) spends millions of dollars a year advertising specials, and then analyzing where their dollars were best spent. By implementing big data solutions, Domino’s Pizza, Inc. (NYSE:DPZ) is now able to connect their cash registers and online sales to see what advertisements brought in what customers, and which ones will be the most profitable to repeat. These effective uses of advertising data are what helped Domino’s Pizza, Inc. (NYSE:DPZ) increase their market share, and in turn, their earnings per share by 30% over the past three years.
Domino’s Pizza, Inc. (NYSE:DPZ) management team is seeing just how powerful this unstructured data can be when used in conjunction with the right analytics software. The use of computer algorithms can turn unstructured advertising data into a meaningful story that management can then immediately take action on. Domino’s will be putting more systems in place to track advertising dollars spent world wide as they roll out more stores in growth markets. We will see this help increase the earnings by both increasing revenue and decreasing wasted marketing expenses.