Car buyers looking to purchase new or used vehicles have relied on the Kelley Blue Book to give them an estimate of how much a vehicle is really worth.
Until recently, the numbers were largely educated conjectures that Kelley analysts arrived at by running a handful of car sales and other metrics through a rudimentary pricing algorithm.
Not anymore. Kelley has begun using sophisticated data analytics tools to sift through volumes of historical and current data to arrive at what company executives say are far better car valuations.
"We went from using megabytes of data to using terabytes of data" for estimating car values, said Dan Ingle, vice president of analytic insights technology at Kelley Blue Book. "We moved from simply averaging data to running sophisticated models," based on transaction and regional data, he said.
KBB is an example of how a growing number of small and medium-size businesses (SMBs) are successfully applying data analytics to improve the way they do business. Driving the trend is the growing availability of relatively low cost, specialized tools for analyzing large sets of structured and unstructured data, according to an upcoming study by The Data Warehousing Institute.
Kelley is an early adopter in the SMB space. The company started embracing analytics technologies about three years ago in a bid to make better use of its historical data as well as the new data it had begun capturing from website users and social media, Ingle said.
About two years ago, the company moved over to a new IBM Netezza Twinfin data warehousing appliance which it supplemented with a second similar system last December. The two systems together, with software from Information Builders and MicroStrategy, form the core of Kelley's new data warehousing and business intelligence capabilities.
Kelley is also using a variety of predictive analytics, data mining and text analytics tools from SAS Institute to help analyze the data it collects. Much of the analytics used to deliver new and used-car values, targeted advertisements, customized offers and reviews on the company's website kbb.com are powered by SAS' software.
From being a legacy book-publishing company, Kelley has transformed into a completely analytics-driven company, said Shawn Hushman, Kelley's vice president of enterprise analytics. Analytics powers almost every facet of the company's business, including its car valuation processes, market research, customer analytics, financial forecasting, and demand planning, he said. Kelley's analytics group has grown from one person to 23 in just just three years.