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The Potential of Big Data

According to a recent article by McKinsey Quarterly, “Big Data” capture and analysis will be the new front-lines for companies trying to stay competitive in the Information Age. I have been following this trend for the past year as the Big Data leaders (SAP, Oracle, Microsoft and IBM) jockey for position. And as mainstream businesses start catching to Big Data analytics, by recognizing the potential to tap into their data and adapt rapidly, proactively and cost efficiently to changes in the business environment, Big Data analysis will continue to offer an unprecedented degree of foresight and business agility.

Here are some of the most interesting findings from the article:
  • Over the last few years, the volume of data {generated} has exploded. In 15 of the US economy’s 17 sectors, companies with more than 1,000 employees store, on average, over 235 terabytes of data—more data than is contained in the US Library of Congress.
  • Emerging academic research suggests that companies that use data and business analytics to guide decision making are more productive and experience higher returns on equity than competitors that don’t.
  • Over time, big data may well become a new type of corporate asset that will cut across business units and function much as a powerful brand does, representing a key basis for competition.
  • Earlier waves of technology adoption, show that productivity surges not only because companies adopt new technologies but also, more critically, because they can adapt their management practices and change their organizations to maximize the potential.
  • Information hoarding within business units also can be  problem: many financial institutions, for example, suffer from their own failure to share data among diverse lines of business, such as financial markets, money management, and lending.
The article ends with the following 5 key questions business leaders should be asking themselves about Big Data and how it could affect their organization. As I have been saying for the past year Big Data has “Big Potential” as it transforms business as we know it and ushers in a whole new level of efficiency. Companies will grow incredibly agile from Big Data allowing for quicker turn-arounds and lightning –fast market corrections.
Below is a list of the five questions the McKinsey Quarterly article enumerated. Below each question I offer a brief summary with bits from the article when my contributions were not warranted.
1. What happens in a world of radical transparency, with data widely available?
Companies with proprietary or privileged data will be increasingly under the gun as Big Data reveals the King really does have no clothes on. Gate keepers and closed networks will suffer as Big Data erodes their competitive advantages that were previously guarded. This will spur innovation, are winning companies, and hopefully make a better product or service for the consumer. Big Data will also usher in a new era of competitive intelligence and corporate espionage— that’s a thin red line.
2. If you could test all of your decisions, how would that change the way you compete?
Big data ushers in the possibility of a fundamentally different type of decision making. Using controlled experiments, companies can test hypotheses and analyze results to guide investment decisions and operational changes. In effect, experimentation can help managers distinguish causation from mere correlation, thus reducing the variability of outcomes while improving financial and product performance.
3. How would your business change if you used big data for widespread, real-time customization?
This is the scary part and it is well under way (think Google…. ever wonder how Google knew, by populating a suggestion, you were interested in a certain topic/product/service) Companies that track consumer’s behaviors will be able to make faster more accurate customized preferences possible. Individualization is what the consumer wants. Or so the marketing experts say. But Big Data will bring tracking consumer behavior to new heights. Some will love it and some will hate—- I really went out on a limp there.
4. How can big data augment or even replace management?
As margins become increasing tighter, any reduction in waste that boost productivity will be extremely valuable. The ability to measure a myriad of metrics in real-time, with the added capability to adjust for maximum productivity will have tremendous cost-saving potential.
5. Could you create a new business model based on data?
Big data is spawning new categories of companies that embrace information-driven business models. Many of these businesses play intermediary roles in value chains where they find themselves generating valuable “exhaust data” produced by business transactions. One transport company, for example, recognized that in the course of doing business, it was collecting vast amounts of information on global product shipments. Sensing opportunity, it created a unit that sells the data to supplement business and economic forecasts.
Finally, with all this talk about opportunity Big Data is not without its complications. Talent is one shortage the article mentions, as engineers and analysts are in short supply in the USA. The ability to think laterally while making the connections across business units and industries will be in highly sought after skill-set.
Privacy will be another hot-button issue for Big Data has the potential to misuse or mismanage personal info will exist. Safeguards will be in place, but accidents or crimes will happen as law-makers race-up to keep pace with the technology.
In the end though, Big Data has arrived and there is no putting this genie back in its bottle. I believe the change Big Data will introduce will be truly revolutionary. Some might quid whether this is progress, others will capitalize on it’s commercial potential, while others will just lap in the convenience of all things digital, but for me Big Data is one of the biggest game-changes to come along and one I hope to shape.

About UX Acrobat - Marc Niola

Marc is an expert UX professional with a focus on customer-centered design principles, social media, gamification and psychology. He has developed innovative business solutions for global corporations, SME, agencies, clients and brands.

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