Are small businesses ready for big data? Um, yes

When SAP(s sap) announced its HANA big data analytics for midmarket businesses Tuesday, one of the first questions was what smaller businesses do with big data. There is doubt that smaller companies even need big data. Let’s be clear: they do.

Just as big enterprises look at unstructured data from social networks to gauge consumer sentiment, and relational data from databases, and perhaps machine data to see how well their equipment is working, smaller companies need the same data points. Many small companies are small, after all, because they’re just starting out, and the smart application and analysis of outside data is one key to growth.

“If you’re a sub shop, you probably don’t have to worry about big data, but if you’re a small online business, or a small financial service provider or a medical practice, you probably should,” said Laurie McCabe, cofounder of The SMB Group, which researches how small and medium businesses use technology. “There’s more and more data out there you can use to make decisions and get better outcomes.”

Even in the sub shop example, there are caveats. A single mom-and-pop store can probably do okay gauging consumer wants and needs in its area, but a small chain of such shops across a small geographic area had better keep its fingers on the pulse — watching its competitors’ special promotions, keeping tabs on consumer comments on Twitter and Facebook

And retail is a cauldron of big data needs. “Retailers need to predict trends, track in-store repeat business, look at pricing dynamics,” McCabe said. If you’re in that business, it’ll be harder for you to compete with companies that can leverage even just the public data if you can’t or don’t.

SAP’s new products take the structured and unstructured data analysis capabilities that were available in its hot-selling HANA in-memory database appliance and repackage it as an add-on to its BusinessOne and All-in-One for smaller companies.  (To be clear, defining SMBs can be tricky. SAP puts any company with annual revenue up to €500 as a small or medium enterprise or SME. McCabe classifies small businesses as those with up to 99 employees and medium businesses as those with 100 to  500 workers.)

All the reasons big companies have to use big data pertain to smaller companies, Christian Rodatus, SVP for SAP HANA, said on the call. Smaller “manufacturing companies need text mining and analysis to provide better quality analysis [of their products] and predict the effect a lack of quality can have on the supply chain, dealing with the impact of production changes,”  he said.

That being said, small and medium companies are notoriously cost-conscious. The availability of inexpensive SaaS-based analytics products will be attractive to such budget-constrained shops. Whether or not SAP’s new HANA packages, which will be available later this year, takes off will depend on price — something SAP did not provide on Tuesday’s call.

Photo courtesy of Flickr user swanksalot.