Forgive the homage to the 1964 movie "Dr. Strangelove," but we all seem to have a love/hate relationship with information. For years knowledge was power, information was king and data on its own was dumb.
It’s a nice sound bite and I’ve used it many times over the years, mostly when I am talking with friends about technology, saying if they think what’s happening now is amazing, "just wait." But I was never certain what it was based on. Now, with the incredible leaps in computer speed and capacity, you have to wonder: Can this growth just go on forever?
I recently read a short article in Daniel Burrus’ newsletter TechnoTrends entitled, "Giant Boost To Moore’s Law," which spoke of a spectacular advancement in computer memory that makes its nearest compatible technology seem like dust mites next to Mount Everest. IBM has created a new type of memory that reduces the number of atoms required to store one bit of data from about 1 million to 12.
That makes the theory of doubling computing power every 18 months seem puny. Of course you can’t quite yet go out and buy a terabyte drive that will fit on the head of a pin, but it will happen. Just think what we’ll be able to do with RFID chips then.
Like the data of old, digital memory, no matter how large, is only as valuable as what you can do with it. So moving it around and mining data is really where the rubber meets the road.
Another article in the TechnoTrends newsletter about a new "Record-Setting Supercomputer" states that Japanese developers recently announced that "K," the world’s fastest supercomputer, has become the first to surpass the 10 petaflop (10 quadrillion calculations per second) milestone. And it did so with a record execution efficiency of 93.2 percent.
So not only are we building computers with larger capacity, but they’re faster, too. If you think this is way too theoretical, just remember yesterday’s academic exercise becomes today’s kid’s game and tomorrow’s enterprise tool. That’s the progression, too. Game consoles are generally the first platform on which new technology gets unveiled. Look at Microsoft’s Kinect system for its Xbox 360; articulated hand gestures and body movements will soon be the preferred method to interface with your computer in the office. Just think of the Tom Cruise 2002 movie, "Minority Report" and you’ll know what I mean (Editor’s note: Kinect is now available for Windows).
This is all good, right? For me, this is when the love/hate part comes in.
My wife is an avid photographer. She loves to spend hours in our backyard taking pictures of flowers, insects and the frogs in our pond to get just the right shot. And she is very good. Back when film was the only format for capturing images, this predilection of hers was very expensive; buying all that film and developing it made feeding this need pricey. When our son was born, the cost skyrocketed to the point where Walgreens actually gave us a business discount on developing just because of the volume.
You can imagine that when we bought our first digital camera and no longer needed to deal with film, I was very happy. I thought of all the money I would save. Little did I know that I was just swapping just one kind of vice for another.
Instead of film and developing costs, I had memory cards and storage devices. On top of that physical expense, there’s the time investment to go through the thousands of photos. With the free aspect of digital, doesn’t it make sense if one picture is worth a thousand words; wouldn’t 100 pictures be worth a million words? That’s what my wife thought and so our storage needs went from MBs to GBs to TBs.
Together with numerous entrepreneurs that developed specified software, I soon realized that management of all of these photos was, in some cases, more important than the pictures themselves. In addition, I’ve come to realize, although not implement, that it is critical to delete unwanted photos early and often and continually organize them.
Without such discipline, data in whatever form it takes is tantamount to useless; which brings me back to the love/hate relationship.
I also painfully learned that storage devices are not infallible. I have spent far too much money on recovery services for external drives that just stopped "driving." As a consumer, as for a lot of small business owners, paying for and managing redundant backup systems can be expensive—not as expensive as having to recover lost data, but a shortsighted business owner might think so. That would be his or her first mistake.
When cloud computing first hit the scene in a significant way, the argument over where the data was being stored and who had control over it was very prevalent. That soon became much less of an issue. The increased security, uptime reliability and anywhere/anytime access made those conversations moot.
Then Apple introduced the consumer to iCloud, and suddenly everyone wanted his or her piece of the cloud. With the growth in mobile technology and the development of mobile apps and social media, storage and speed of access to data reached new heights. Leading the charge, Apple invested more than $1 billion in data center servers and networks to support the development of new apps on top of the more than 500,000 apps already in existence, to provide cloud-based services to its users. And you can bet the other companies are not far behind Apple in taking similar steps.
So how do you cope? First, independent agents have an advantage over many small businesses because most agency management systems help manage the data in a structure that supports effective data mining. But you shouldn’t rely solely on your system to do all the work or you might lose sight of what’s actually in there.
George Nordhaus, chairman of AgenciesOnline, in one of his weekly email updates, discusses the "Ten facts every growing agency needs to know…about itself:"
- Do we have an in-depth understanding of our client base?
- What is the average number of policies we have per account (personal and commercial)?
- What is the average age of our customers?
- How long does our average client stay on our books?
- What are our first-year costs to add a new customer?
- What is the minimum commission we can take on an account and still make money?
- Do we have a documented marketing plan, results traceable on our agency management system?
- What is the average in new commissions our producers generate each year?
- How often do we contact every one of our customers?
- Do we have a written goal for the next 5 years?
Each of these important questions requires the review of lots of data. Without a solid foundation for collecting, managing and manipulating your agency data, you’ll never be able to answer, and your customers will soon start feeling more like a number and less like a person.
So whether you love or hate data, we must all be proactive about how we deal with it. It is growing beyond our wildest expectations and if there’s one thing you can be sure of, it will continue. Plan for it to happen. Have a data strategy in place in your agency. Share it with your carriers. Update it frequently because changes in the world of data storage and management happen frequently. Make sure you have a back-up plan that’s more than taking home a copy of the files every night.