Analytics are key to casino operators better understanding and reacting to the ongoing inside space technology revolution

Authors’ Note: In the third of a 12 article series themed on where the money is now for “smart” casinos, VizExplorer executives explore the art of analytics, and make a case as to why its vital casino operations embrace this specialized skill when considering the inside space revolution. Please note these articles are meant to stimulate thought and that we are using some deliberately provocative metaphors which should be taken with a grain of salt.

In the first two parts of our series on where the money is now for smart casinos, we covered how consumer adoption curves define how new technology impacts the world and how this impacts the gaming industry.

To summarize: new technologies take around 10 years to hit full stride and be fully adopted by the consumer, a phenomenon that has been born out in disruptive technologies ranging from radio to smart phones. The challenge is that the first few years often look very flat with little consumer adoption then there is this rush as consumers embrace the new technology. In this article we will show why this 10 year adoption is likely to be dramatically accelerated for the inside space revolution and that this change drives dramatic need for practicing the art of analytics.

THE OUTSIDE SPACE REVOLUTION

It’s no secret that global positioning systems (GPS) have transformed the outside world space completely. Initially, this technology was only available for the military, who obfuscated the signal (a practice called selective availability) in order to reduce its accuracy and keep the system from being used by others. Who could have imagined that when the U.S. Government turned off selective availability in May 2000 that the number of GPS devices would be measured in the billions by 2015? Today nearly every car and phone has a built in GPS device and our world is being transformed by this ubiquitous technology. To breakdown the impacts that this outside space revolution has had, let’s consider four critical elements: maps, navigation, automation services and smart devices.

Maps: Prior to the outside space revolution, sourcing maps was difficult and expensive. There were many companies running large businesses managing these mapping databases. In today’s world, nearly every house has been mapped and the underlying context maps are provided by Mapquest, Google, Yahoo and OpenStreetMap to name a few.

Navigation: Prior to the outside space revolution, we poured over printed maps, asked people in the know and quite often got completely lost. Now, GPS systems offer multiple paths to a destination and provide step by step directions on how to get to where we want to go.

Automation: Companies like Uber and Tesla (with its auto driving car) are changing the basics of how we think about travel. Quite simply, we are now facing an era where cars will drive themselves and the entire nature of how think about travel will be transformed.

Smart Devices: The smart device is the fourth critical enabler—it places all these services and the connection to automation in the hands of the consumer.

THE INSIDE SPACE REVOLUTION

Unlike the outside space, there is no inside space GPS in wide use. However, this is changing rapidly as companies such as CISCO, AirPatrol, View Antenna and many others close the gap on inside space locational services. There are two critical factors to consider when thinking about consumer adoption in the inside space world: the devices and consumer adoption.

Unlike in 2000 when GPS selective availability was removed and you had to purchase a specialized device to use the service, in today’s world smart phones are ready to take on the task. Even more important are the consumers—they are accustomed to using maps on their smart phones or in their cars, so while the technology stack to provide the locational services is dramatically different than the technology of GPS, to the end consumer it is as simple as asking directions to the nearest bathroom and being shown a map of how to get there. Furthermore, in the world of self-driving cars, the consumer of the future might request a small electric shuttle to save them the walk to the bathroom.

To summarize: the changes being wrought on the world by the outside space revolution give us a roadmap of the inside space revolution. This revolution is one of those rare examples in technology where we can say that the next big thing seems quite predictable.

INSIDE SPACE & THE SMART CASINO

As discussed in parts one and two of this series, the smart Casino is coming and it is going to change everything about how gaming operates. Adding to the inside space revolution, we have complete real-time data about where things are.  This dramatic shift means that we are not only able to continuously connect all the data streams about our casino but also begin providing intelligent services.

Previously, we explored how labor cost optimization could use some of this data. We now go further and ask the critical question: What aspect of the business will not be dramatically impacted by complete and accurate knowledge of where everything and everybody is in real-time?

This critical question brings us to a fascinating position where it is hard to find areas of the business that will not be impacted.  Let’s explore one area of casino operations that one might at first think isn’t likely to be impacted by this new inside space technology: the valet.

If we have complete knowledge of our customers’ locations, then certainly valets can benefit.  Historical patterns of location and time in a casino can allow us to build predictions on when a customer is likely to be leaving the casino.  For these customers, the valets can simply retrieve their cars to a “staging area” which allows for much faster service to guests.  In addition, casinos may leverage RFID for each car parked by valets, allowing for full knowledge of the location of every vehicle and increasing valet efficiency.

The lesson from this example is that we can anticipate an era of massive change to the fundamental nature of inside space, how we interact with it, how we manage it and how our customers perceive it. All of which means casino operators will need to embrace change leadership. Here is what Peter Drucker, the renowned thinker who helped to establish the philosophical and practical foundation of modern business corporations, had to say on the impact technological change can have on a business:

“One cannot manage change. One can only be ahead of it. In periods of upheavals, such as the one you are living in, change is the norm. To be sure, it is painful and risky, and above all it requires a great deal of very hard work. But unless it is seen as the task of the organization to lead change, the organization will not survive. In a period of rapid structural change, the only ones who survive are the change leaders. A change leader sees a change as an opportunity. A change leader looks for change, knows how to find the right changes, and knows how to make them effective both outside the organization and inside it.”

Casinos operators will be well served heeding Drucker as it pertains to the inside space revolution.

THE IMPACT OF ANALYTICS

Analytics can also help casino operators get a better handle on the problems and potential of inside space technology. However, it’s is important to first understand that analytics is really more of an art than a science. Indeed, reporting is a science… if you want to know how many widgets you sold yesterday, you take your source system tracking data, ETL it into a data warehouse, push the data into a front end business intelligence system, then access that system via a computer, tablet or smartphone, and voila, you know how many widgets you sold yesterday.

But if you want to know how you can drive incremental revenue from the changes being brought about as part of the inside space revolution, you will need to rely heavily on analytics.

Let’s consider the example of introduction of a new marketing program. Now that we have the information about player movement and interactions with the casino, the yield optimization problem becomes much more complex: Should the hot new game be placed in a high or low traffic area and do these areas have a high conversion rate from people to play?  Will it cannibalize nearby games and how will players move between the games? How can we measure the reaction of taking away a player’s favorite game?

There are metrics that can help us answer all of these questions, however there is no set formula that will tell us which location of the hot new games will drive the most incremental gaming revenue. Rather, we have to use our analysis of past moves to understand how customers react to changes we make on the slot floor. This is a complicated exercise involving multiple metrics on dozens of changes made to thousands of games.  In this way, analytics is a healthy combination of both art and science.

As Drucker states, it is change leadership to bring about action that drives value from analytics, and in the art of analytics, collaboration is key to implementing the actions. Collaboration regarding analytics can be seen in team meetings, deciding on the changes to implement and then taking positive efforts to implement them. This collaboration then extends to enacting the decisions. It is this collaborative skill that we need to instill in our organizations in order to enable the change leadership necessary to bring about the inside space revolution.

FUNDAMENTAL APPROACH

When looking at a problem from an analytical approach, there are two critical dimensions. First, do we know the right question to ask? In many cases, knowing the question is the hardest part of analytics. Second, do we have the data we need?  It is clear that one of the key elements that the inside space revolution brings is a wealth of new location based data.

To understand data better, it helps to use a Spielman Diagram of Analytics, which charts and explores the relationships between four actions: reporting, exploring, modeling and researching.

Reporting: We have good access to the data and the structure and business rules of this data are well understood.  Questions such as what was my EBITDA last month or how much revenue did I make yesterday are good examples of this category.

Exploring: In this space, we do not even know the right questions to ask, we are often overwhelmed with data. It is into this area that the data from the inside space revolution will land. The color and nature of this data is complex, but we can say that true knowledge of this data will fundamentally change our understanding of the business.

Modeling: In this analytical category, we do know the questions to ask but we are forced to build models to provide the answers. Normally the output is a series of models for different assumptions based on the raw data.

Researching: Quite simply, we don’t have the data nor do we know the questions to ask relating to that unknown data. This is in fact the current status of the industry with regards the usage patterns of inside space locational services.

Applying this model to the inside space revolution, we see that all these elements will be critical to understanding and leading change in your organization. To begin with, reporting on key elements will be an important part of providing simple to understand and transparent operational goals for the organization. In our valet example, we can track the time it takes for a customer to get their car once they present their ticket to valet.  In an organization leveraging inside space data, we saw above that this time can be dramatically (and exponentially) reduced.

Exploring inside space data will be critical to unlocking opportunities for leveraging this sea of new data.  It is the belief of the authors that this approach will involve both art and science, both numerical analysis and robust visualizations.

Modeling will be a key tool to getting value from our inside space data.  As our valet example shows, knowing where a customer is (and when they are there) is not sufficient. We need to leverage historical data of this and other customers to build models that can predict the future—such as when a customer is about to go to valet and ask for their car.

When it comes to research in the gaming industry, it is clear that leading the change to an inside space revolution will require significant research. For those of us who have worked in the industry, it is equally clear that getting resources for this research will be difficult.  Leveraging tools and expertise outside of the casino’s organization may be critical to success in this area.  Looking for companies that are leaders in horizontal innovation will be just as important, as the inside space revolution spans the length of the entire casino apparatus.

The casino industry is undergoing an important change as the amount of data about customers—what they are doing, where they are going, when they are in different areas of the casino—becomes more readily available.  The change leaders in this inside space revolution will be the ones to survive and thrive in this new paradigm.