Over the last
several years, there has been a massive surge of interest in Big Data Analytics
and the groundbreaking opportunities it provides for enterprise information
management and decision making. Big Data Analytics is no longer a specialized
solution for cutting-edge technology companies - it is evolving into a viable,
cost-effective way to store and analyze large volumes of data across many
industries. But how will this translate to adoption of these new technologies?
How will companies incorporate Big Data into their existing business
intelligence and data warehouse (BI/DW) infrastructure? How can end users take
advantage of the power Big Data has to offer?
We
live in a world of big data. Companies
have to learn how to deal with mountain of data. The question is how data has changed our
business reality. Here are some facts on
the new reality:
- It
costs $600 to buy a disk drive that can store ALL the world music
- There
are 30 BILLION pieces of content shared on Facebook every month
- Data
acquisition is growing at a rate of 40% annually, but IT budgets are only
growing at a 5% annual average
- In
April 2011, the US Library of Congress had collected 235 terabytes of data, but
15 of the 17 industries in the United States store more data per company than
the Library of Congress.
Companies
today churn out huge volumes of transactional data, capturing trillions of
bytes of information about their customers, suppliers, and operations. Companies can capture information from the
millions of network sensors being embedded in the physical world, in the
devices we use and run our world; mobile phones, industrial machines, automobiles,
energy meters, and more. These sensors
sense, create and communicate information about us, how we live our life and
how we produce and consume things.
Big
Data is defined as databases whose size is beyond the ability of traditional
databases to store, manage and analyze.
Big Data is not defined by size (i.e. gigabytes, terabytes or
exabytes). It is assumed that technology
advances so size becomes less of an issue.
The amount of data in our
world has been exploding, and analyzing large data sets-so-called big data-will
become a key basis of competition, underpinning new waves of productivity
growth, innovation, and consumer surplus, according to research by McKinsey's Business Technology Office.
Leaders in every sector will have to grapple with the implications of big data,
not just a few data-oriented managers. The increasing volume and detail of
information captured by enterprises, the rise of multimedia, social media, and
the Internet of Things will fuel exponential growth in data for the foreseeable
future
1.
Data has swept into every industry and business function and are now an
important factor of production, alongside labor and capital. By 2012, nearly
all sectors in the US economy had at least an average of 200 terabytes of
stored data (twice the size of US retailer Wal-Mart's data warehouse in 1999)
per company with more than 1,000 employees.
2.
There are five broad ways in which using big data can create value.
- First, big data can unlock significant value by making
information transparent and usable at much higher frequency.
- Second, as organizations create and store more transactional
data in digital form, they can collect more accurate and detailed performance
information on everything from product inventories to sick days, and therefore
exposes variability and boost performance. Leading companies are using data
collection and analysis to conduct controlled experiments to make better
management decisions; others are using data for basic low-frequency forecasting
to high-frequency nowcasting to adjust their business levers just in time.
- Third, big data allows ever-narrower segmentation of
customers and therefore much more precisely tailored products or services.
- Fourth, sophisticated analytics can substantially improve
decision-making.
- Finally, big data can be used to improve the development of
the next generation of products and services. For instance, manufacturers are
using data obtained from sensors embedded in products to create innovative
after-sales service offerings such as proactive maintenance (preventive
measures that take place before a failure occurs or is even noticed).
3. The use of big data will
become a key basis of competition and growth for individual firms. From the
standpoint of competitiveness and the potential capture of value, all companies
need to take big data seriously. In most industries, established competitors
and new entrants alike will leverage data-driven strategies to innovate, compete,
and capture value from deep and up-to-real-time information. 4. The use of big
data will underpin new waves of productivity growth and consumer surplus. For
example, it is estimated that a retailer using big data to the full has the
potential to increase its operating margin by more than 60 percent. Big data
offers considerable benefits to consumers as well as to companies and
organizations. For instance, services enabled by personal-location data can
allow consumers to capture $600 billion in economic surplus.
4.
While the use of big data will matter across sectors, some sectors are set for
greater gains. The computer and electronic products and information sectors, as
well as finance and insurance, and government are poised to gain substantially
from the use of big data.
5.
Several issues will have to be addressed to capture the full potential of big
data. Policies related to privacy, security, intellectual property, and even
liability will need to be addressed in a big data world. Organizations need not
only to put the right talent and technology in place but also structure
workflows and incentives to optimize the use of big data. Access to data is
critical-companies will increasingly need to integrate information from
multiple data sources, often from third parties, and the incentives have to be
in place to enable this.
This is the
first in a series on Big Data, and how it's going to Change our world.
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John Ragsdale, CEO of Customer Vision
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