Growing a business in the GAFA world
Gafa is a new acronym that is being used in the international world of business. GAFA stands for Google, Apple, Facebook and Amazon—the four big technology companies that are impacting the lives of people across the world. Some pundits suggest adding Microsoft to this group and others are quick to point out that China has its own set of leading technology companies, including Baidu, Ant and Tencent. While the debate continues on whether this group is constituted by four or more companies, it is clear that a limited number of large technology companies are going to impact every sphere of our lives from business, to society, to humanity. We refer to these companies as GAFA companies to simplify our understanding of some of the events and trends around us.
The primary reason why GAFA companies have become so powerful is due to the vast amount of data in their possession. According to one estimate, GAFA companies collectively store several exabytes of data (1 exabyte is equivalent to the amount data stored by 1,000,000,000,000 personal computers). Each of these companies possesses a vast and diverse data set of about everything. They possess data about individuals' behaviour as customers, social beings and producers. These companies also possess large amounts of data about other companies and their businesses. They deploy sophisticated software and algorithms to mine this data and create insights about every business and individual in the world. GAFA companies use these insights to develop new products and grow their own business.
These big technology companies have a presence in Bangladesh too. While all of them may not be present physically, their products are pervasive. We rely on Google Bangladesh to search internet content specific to Bangladesh. Google Maps helps us navigate places and its street view feature allows us to find a particular location. We can shop on Amazon or Alibaba and have products delivered to our doorsteps via international consignments. According to an analysis conducted by leading social media management platform Hootsuite, Dhaka had the second largest number of active Facebook users in 2016, among all the cities in the world. Finally, all these users use computers or smartphones that are powered by the operating systems supplied by Microsoft, Apple or Google (Android). Users contribute data to these technology giants, thereby helping them improve their products and services further.
Companies across sectors in Bangladesh need to think about how they can take advantage of such a technology ecosystem to grow their own businesses. Their business may or may not be fully digital yet; however, on their journey to become digitalised organisations, they need to shape their strategy keeping in mind GAFA companies and their services. Their strategies should focus on three broad levels of activities—that is, data sourcing, service sourcing and data contribution.
The definition of data has evolved as we've moved into the world of ubiquitous computing. Data used to be structured and based on a defined data model and data structure. However, over a period of time, data became more unstructured. Data no longer remained a binary set that represented texts or numbers. Today, data also refers to binary sets that represent audio, images and video. Each organisation generates data while doing business—personal data, production data, customer data and others. Each organisation may claim that this data is its property. However, such data alone may not be sufficient to create insight for the business. In order to create rich business insights, organisations need to procure data from the public domain, which is primarily dominated by GAFA companies. In other words, businesses in Bangladesh should have a data sourcing strategy as part of their business strategy.
Technology has evolved significantly over the last couple of years. Traditional technology architecture recommended that everything be hosted in-house. However, cloud technologies offer more inexpensive and robust architecture alternatives, allowing a majority of technology solutions to be hosted outside an organisation with the help of professional hosting providers. Subsequently, a paradigm of services and micro services has started emerging. The functions that are common in the industry can be procured as services from the marketplace. For example, a map of a particular area doesn't need to be redrawn anymore—it can be procured from Google Maps. Companies in Bangladesh should develop a thorough understanding of services to be produced internally through on-premise or cloud-hosted technology solutions and the services to be procured from GAFA companies. In other words, companies should have a service sourcing strategy as part of their business strategy. This will complete an organisation's enterprise architecture.
Renowned economist Milton Friedman popularly said, 'There is no such thing as a free lunch'. Similarly, the data and services available from GAFA companies are not free altogether. While businesses have to pay for access to many services, users have to contribute back through data irrespective of the services being free or charged. The contributed data contains personal data, behavioural data and, at times, enterprise-owned data. Refusal to share such data demanded by GAFA companies may result in denial of their services, some of which may only be available from them. GAFA companies thrive on their robust data collection process and subsequent data mining using their algorithms, which leads to the creation of business insights. Data collection helps them in sharpening their offerings and beating the competition. Companies in Bangladesh need to develop an understanding of the kind of data they are going to contribute and how they can optimise this contribution process without comprising data security. In other words, companies should have a strategy towards data contribution while developing their enterprise architecture and business strategy.
The digitalisation journey is going to create significant growth opportunities for companies in Bangladesh. The adoption of the right strategy around GAFA products and services will help accelerate this journey to a new level.
The writer is partner at PwC. The views expressed here are personal.