Knowledge is power

From its tentative toe-in-the-water beginnings, diving deep into the data and nurturing long-term relationships with companies undergoing digital transformation has paid dividends for global data analytics powerhouse Quantium.

Adam Driussi remembers sitting with the Foxtel executives in their waterfront Pyrmont offices in Sydney, gingerly explaining that their strategy was heading in the wrong direction. It was 2002, and Driussi and partner Greg Schneider had just left their jobs as insurance actuaries to start a data analytics business, Quantium. The pair had been focused on insurance pricing, which required actuaries to gather wide-ranging data, populate a formula and establish risk premiums for customers.

“I liked that sort of work,” says Driussi, of his time in the insurance industry. “The smarter you were with data and the algorithms you built, the better your competitive edge was.”

But aside from insurance companies, and some banks looking at credit risk, few Australian businesses were delving into the customer information that was starting to flow more freely thanks to the internet connectivity. So, after deciding to apply their data analysis processes to a wider set of industries, Driussi and Schneider established Quantium. And that’s what brought them to that awkward meeting with their very first client, Foxtel.

“They had wanted us to help them reduce churn,” remembers Driussi. “They were signing up a lot of customers, but they were losing them, as well.”

Digging into the data

The Quantium duo began looking at Foxtel’s customer behaviour and found that people with multiple set-top boxes in their homes were much less likely to stop their subscription. It made sense — the more of a product people had, the more they used it, and the less they switched it off. But at the time, Foxtel had a strategy to only sell one set-top box per household. The company was aiming to reach as many customers in as many households as possible with their limited stock supply.

“It was kind of the wrong strategy, because those customers weren’t sticking around,” says Driussi. “But it was exciting for us, because we were finding important pieces of information for companies in their data, that maybe their judgement hadn’t quite got right.”

Business booms

Quantium took the Foxtel experience and ran with it. It was the start of a run of good years, where Driussi and Schneider knocked on the doors of the biggest companies in Australia, asking to speak with them about their data. At first, many were sceptical, but the novelty of silently interrogating their customers and the rapid growth in computing power, soon meant Quantium was gigabytes-deep in data — from retail and banking to mining and transport.

“Back then, it was almost like making a market in some ways,” says Driussi. “We were convincing people it was worth spending money to look into their data and do something with it.”

Some companies were switching on to the types of questions they could ask from the data they already had on hand. Things like, why are we losing customers in this region? Is our pricing right for this demographic? How can we add value or augment our existing product? But many were happy to hear what Driussi and Schneider could tell them about their own businesses.

“One of the biggest limitations was people thinking their data wasn’t good enough to do anything with,” says Druissi. “In fact, we still see that today — companies feel their data isn’t as good as everyone else’s, when really, the scrappier it is, the more value we can add.”

Quantium’s successful growth story from that point is well known. The company never raised any money, and with a clear focus on the big end of town, it established long-term partnerships with companies undergoing profound digital transformations.

Stack it up

“Each project was new, it wasn’t repeatable, but we were building our own technology stack that meant we could perform more and deeper analysis as time went on,” says Druissi.

That tech stack is now 17 years old, and CEO Driussi and executive director Schneider head a team of 800 people, across six countries. Quantium has entrenched itself in businesses like CBA, Suncorp, IAG and Telstra, as well as global players like Walmart. In a nod to how the company is developing retail plays, in April, Woolworths quietly paid more than $223m to increase its stake in the business from 47 per cent to 75 per cent. Driussi, Schneider and the rest of the team members retain 25 per cent. The supermarket giant has doubled down on improving the experiences, ranges and services it provides to customers.

Quantium, meanwhile, has inked a joint venture with the Commonwealth Bank to unlock insights on what it claims is Australia’s “largest aggregated and de-identified transaction banking dataset”. “The amount of data that’s now collected throughout the economy is astounding,” says Druissi. “Compared with what it was when we started out, it’s just extraordinary.”

Boardroom responsibilities

As it stands, data is understood to be one of any organisation’s most valuable assets. But whether directors can assist in ensuring an organisation’s strategy is on track and is leveraging the profound insights from customer data is top of mind for many boards across Australia. “It’s definitely a challenge boards have,” says Driussi. “Many directors have grown up in a non-data world and a lot of their experiences running businesses were before data exploded onto the scene.”

However, Driussi stresses that data analytics and technology only ever support a strategy, they are rarely, if ever, a strategy of themselves. Building a technology stack or organising how a business will build its data capabilities is often how data analytics firms like Quantium can help, but the organisation needs to understand data and technology are only ever a tool to get to a destination, not the destination itself. “Your data strategy is no different to your strategy for the business, you just want to use your data and technology to do it better,” says Driussi. “Remembering that can often put people’s minds at ease.”

Secondly, despite Driussi’s years of unravelling data, he says human judgement and experience are only ever enhanced by data, never trumped by it. “Even with that Foxtel experience, the organisation took the information and applied it in a smart way. Technology plus human is much, much better than just technology or just human.”

He says directors — rather than worrying about how data is managed or analysed — are best placed to see that decisions are made with the strongest integrity. As boards around the world shoulder much of the responsibility around ethics, maintaining an ethical purview around data use is a profound way boards can contribute to a company’s data program.

“Data is often indiscriminate, and can offer businesses real competitive advantages, but it needs to be used in an ethical way,” he says. “It’s a question of your ethics as a business and making sure that anything you do with data is within that.”

In late 2019, Apple and Goldman Sachs were investigated and cleared of discriminatory practices by the New York State Department of Financial Services after releasing a new credit card alleged to favour male customers. A complaint had gone viral after one customer tweeted he was offered 20 times the credit line offered to his wife, despite them filing joint tax returns and having joint property ownership. The Apple/Goldman Sachs defence was that the algorithm was “gender-blind”, but many perceived an inherent bias in their product and processes. Apple subsequently initiated several new “pathways”to enable easier approval.

Whereas compliance is a relatively simple concept — demanding organisations adhere to the law — ethics require directors to constantly ask how to protect, fight for and empower users. And all contribute to perceptions of trust. “From a governance point of view, directors want to make sure that anything done with technology or data is done within the ethical parameters that the board sets more broadly,” says Druissi.

Keeping data secure

While reams of personalised data are now interrogated and analysed deeply by companies, they also create a juicy honeypot for opportunistic criminals, circling large companies like sharks. In fact, cybersecurity risk has fast become one of the most discussed topics around board tables and has already given many directors sleepless nights for much of 2021.

ASIC, the Reserve Bank of New Zealand and telco Singtel are just some of the big names hit by cyber attacks so far this year. In March, Oxfam confirmed a data incident which impacted its 1.7 million-person contact/donor database that then emerged for sale on hacker forums on the dark web. Also in March, Nine Network said in a statement that the largest cyber attack on a media company in Australian history, had halted its news production systems for more than 24 hours.

And last year, while the world reeled from COVID-19 and supply chains ground to a halt, logistics giant Toll Holdings suffered two attacks in the first half of 2020. The first, which ran from January to March, forced the company to rebuild its IT environment, which took six weeks. The second, in May, saw a large amount of corporate data stolen and leaked onto the dark web.

“As an analytics business we don’t secure the information like specialist providers would,” says Druissi. “But there are always bad actors wanting to get at the valuable information inside a system, so having an understanding of that value and how to secure it is important for directors.”

Quantium manages the sensitive data of its clients, and its ongoing investor relationship with Woolworths, in the same way many large consultancy firms do — by ring-fencing people on projects and building Chinese walls between teams. In this fashion, the company keeps sensitive data from moving, and it has a strong mandate with Woolworths to run the business independently.

Innovation to the fore

Quantium has always wanted to work on the biggest problems facing the biggest companies, and over its 17-year history, has managed to look under the hood of many of Australia’s largest corporates. However, it is the development of new products and services that gives Druissi and his team the biggest rewards. Most recently, the company has been developing a “green score” that banks — with their penetrating insight into customer purchasing behaviour — can use to assist reducing retail carbon emissions.

“We figured all that amazing transaction data can reflect their own story to a customer,” says Druissi. “And people everywhere want to know how they can reduce their carbon footprint.”

The Quantium team has been working with a large US bank looking at the types of brands utilities, airlines and subscriptions people spend money on, and how much carbon those products or services might emit. By acknowledging that customers want insights into their own behaviour, they’ve been able to add value to people’s banking experience, reflecting their own behavioural data back in an understandable format.

“That way, the customer can make environmental decisions around their own behaviour,” says Druissi. “Like everything with technology and data, it all comes down to giving human beings more tools with which to exercise their own judgement.”