When an expert tells you that the amount of data is exploding it usually leads to a pitch to buy more storage capacity or tools to better manage the storage you have. While that’s probably not bad advice these days, it misses the most important point.
The point usually overlooked is that the data, when used right, has great business value. “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,” declares McKinsey in a recent research report. Click here for a copy.
IBM, which is in the business of selling technology to generate, capture, store, analyze, and apply data, has been pushing the idea of the business value of data for years. Next week it is holding its annual Information on Demand conference in Las Vegas. There it will showcase its thought leadership and latest technologies for dealing with big data. Expect a number of product announcements.
Big data refers to the large amounts of unstructured data that is captured through RFID, myriad sensors and meters, from social media, and even digital video cameras. Analyzing this data can produce valuable insights that can be applied in variety of ways to achieve competitive advantage. Initially, big data was something only big utilities or giant retailers like Wal*Mart were concerned with. But that’s no longer the case.
For example, one retailer took in-store and parking lot security surveillance video and applied different analytics and used the insights gained to change store layout to facilitate traffic flow and optimize staffing at cash registers. According to the McKinsey study, companies that tap the presence sensing and location data from mobile devices could capture $600 billion in surplus consumer spend. If applied to healthcare, big data could produce more than $300 billion in value every year, the researchers estimate. Two-thirds of that could go to reducing US health care expenditure by about eight percent.
The McKinsey researchers go on to identify five broad ways in which using big data can create value:
- Make information transparent and usable at much higher frequency and to a much deeper level of detail
- Collect more accurate and detailed performance information on everything from product inventories to sick days, thereby exposing variability and boosting performance
- Pursue ever-narrower segmentation of customers to more precisely tailor products or services for purposes of increasing spend and optimizing pricing
- Tap sophisticated analytics, including real-time analytics, to substantially improve and speed decision making
- Leverage big data to drive the development of the next generation of products and services, particularly through analysis to social media content
Technology vendors are scrambling to deliver big data now. In September EMC announced a major big data initiative here. Oracle addressed big data early in October at its Openworld conference here. HP’s announced acquisition of Autonomy signals its intention to compete in the big data space too.
All companies in all industries, regardless of size, need to take big data seriously. This isn’t, however, just an IT responsibility. IT can deploy the tools and technology and collect and manage the data, but the business managers need to get deeply involved.
How? Start with their data wish list—information the business would like to have—and then together IT and the business can figure out where and how the data can be acquired or what you need to generate, capture, meter, and measure to get the data. Next, the business will have to come up with the analytics to produce meaningful insights. This will go far beyond simple sorting or filtering. Finally the business must be willing to act on what it learns. That may be the hardest part.