The term ‘Big Data’ has created a real industry of processes, personnel and technology to support what appears to be an exploding new field. Companies such as Amazon and Wal-Mart as well as bodies such as the U.S. government and NASA are using Big Data to meet their business and/or strategic objectives. Big Data can also play a role for small or medium-sized companies and organisations that recognise the possibilities to capitalise upon the gains.
Companies have sought for decades to make the best use of information to improve their business capabilities and performance. However, it's the structure (or lack of) and size of Big Data that makes it so unique. Big Data is also special because it represents both significant information - which can open new doors – and the way this information is analysed to help open those doors. The analysis goes hand-in-hand with the information, so in this sense Big Data represents a noun – ‘the data’ - and a verb – ‘combing the data to find value.’ Having said this, individuals with specialist skills are required to comb the data to find true value.
Currently many management leaders are generalists and possess strong business skills. However, the next generation of management leaders are being groomed for data specialist roles as some of the world’s largest companies adapt to a faster and more technical way of doing business.
Big Data’s growing influence has been captured in a recent study by McKinsey & Company (McKinsey) that focused on five main domains – healthcare, retail, manufacturing, personal-location technology and the public sector – and revealed that Big Data can generate substantial value in each.
McKinsey estimates that if the US healthcare sector adopted data to drive efficiency, the industry would generate $300 billion in revenue each year, and estimates that US retailers could increase net margins by 60 percent. In Europe, governments could save more than $149 billion using Big Data, says McKinsey, and consumer businesses could net $600 billion in surplus by capturing personal-location data.
A new frontier
Big Data is now billed as the next frontier for businesses. It is extremely valuable for consumer businesses and has had a profound effect on the B2B environment. As an increasing number of organisations move towards becoming more customer centric, Big Data allows them to think about service rather than just product.
It provides a granularity and a real time element to understanding an organisation’s customers that previously didn’t exist. And as with most technologies, this technology is becoming cheaper as more and more vendors look to offer solutions in this space.
Leading organisations are introducing changes to accommodate this Big Data surge. For example, Barclays Bank recently appointed industry heavyweight Usama Fayyd, the tech-banker and former Nasa scientist who was previously Yahoo’s chief data officer in what was the first instance of a major corporation creating such a role. Struggling British supermarket chain Tesco appointed Michael Comish as its group digital officer in a bid to bolster its digital offering and reverse a slide in sales. Comish is a serial digital entrepreneur who founded Blinkbox in 2006 before selling it to Tesco in 2011.
Last year, just 7 percent of companies with an annual turnover of $250 million or more had chief data or digital officers, according to Gartner. However, by 2015, Gartner expects this number to have tripled.
The speed with which firms have hired executive-level data specialists is defining the next generation of managers who will lead them. This adoption has given rise to a feast of career opportunities in data.
However, there is an astonishing shortage of talent with the required skills necessary for organisations to take advantage of Big Data: McKinsey estimates that by 2018, the US will have a dearth of nearly 200,000 people with deep analytical skills, and 1.5 million managers and analysts with the know-how to use Big Data to make effective decisions.
Some educational institutions are recognising the gap. Some argue that training in Big Data does not necessarily create a top consultant or marketer; it is how a student uses these skills to complement their existing skill-set that will get a student noticed by top recruiters.
Such organisations require systematic analysis to derive insights on what makes their products and customers tick. Online marketing and Big Data are turning out to be sources of competitiveness for many organisations, therefore placing immense value on Big Data.
The potential financial savings are substantial. McKinsey believes that the manufacturing sector could see up to a 50 percent decrease in its production development and assembly costs, and up to a 7 percent reduction in working capital, if it adopted Big Data. And global personal-location data, driven by smartphones and tablets, is predicted to add an eye-watering $100 billion in revenue for service providers, and a further $700 billion value to end users by 2016.
But McKinsey points out that businesses face many hurdles when using Big Data to enhance their proposition. 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.
Policies related to privacy, security, intellectual property, and even liability have yet to be addressed in a Big Data world. Data security is also an issue. It is unclear how companies can protect competitively sensitive data, or data that should be kept private. Recent scandals involving data breaches, such as that experienced by eBay in June 2014 have exposed consumers and damaged corporate reputations.
There are also significant legal issues. Questions have been raised about the intellectual property rights attached to data, and who is responsible when inaccurate data leads to negative consequences.
With Big Data management still in its infancy, it remains a major issue for all business.
By Amit Shah, Consultant, Certeco