“Data is the lifeblood of the digital economy, it can give insight, inform decisions and deepen relationships”
The Big Data Movement has gained quite some attention this year as being one of the greater e-commerce trends of 2016. And rightly so, considering firms that employ strategies including big data enjoy an average increase of 60% in business margins. But then why haven’t all firms started incorporating big data practices? Or better yet, why do some firms that employ big data strategies not experience the benefits from it? But let’s start from scratch.
The Big Data market is expected to grow to $187 billion by 2019, an increase of approximately $65 billion in just 5 years. Yet what has caused this increase? The digitization of business activities has enabled firms to record all types of information, that can then be structured to determine what data will be valuable to further analyze and act upon. Although one may associate the popularity of big data to the advancements in our technological environment, its success results from the higher availability of information. The more data there is to be analyzed, the more potential patterns can be identified – ultimately creating cost reduction advantages, better decision-making opportunities and new products and services to meet the consumer’s exact needs.
Yet, despite having employed data management practices, why do some firms fail to experience the aforementioned benefits? Studies have shown that many of these lack a proper business data strategy with the necessary skills and technology needed. Additionally, some firms do have access to large data sets, but do not know how to use this data to gain value from it. They regard big data as a simple business activity, as opposed to making it a part of the company culture – the firms that have effective practices are those that view big data as a valuable resource of the firm in its entirety and not just one of the IT department.
So how should a firm start making the most of its data? It should formulate a data strategy, tailored to meet the company’s goals, that is based on three elements: data, analytical models and tools. Firstly, a company should assemble, integrate and structure its data. Although this may initially be a long process, having all its information together will help advanced analytical models to detect unexpected patterns, potentially creating a competitive advantage for the company. The last essential element is tools – to translate the data outcomes into language that managers and employees can understand. It does not matter if a company has analyzed and found patterns in data – if the resulting model is unclear to employees, they will not act upon it. The data management process has then been practically useless and the firm in its entirety doesn’t benefit from big data.
What are your thoughts on big data? Why do you think some firms aren’t able to fully reap the benefits of the big data movement?
References
Gutierrez, D. (2016). What Does the Future Hold for Big Data Analytics?. [online] Inside Big Data. Available at: http://insidebigdata.com/2016/10/22/what-does-the-future-hold-for-big-data-analytics/ [Accessed 21 Oct. 2016].
Li, T. (2016). Session 2: Industry Disruption, online course materials, Semester 1, 2016, Erasmus University.
McAfee, A. and Brynjolfsson, E. (2012). Big Data: The Management Revolution. [online] Harvard Business Review. Available at: https://hbr.org/2012/10/big-data-the-management-revolution [Accessed 21 Oct. 2016].
McKinsey & Company. (2013). Big data: What’s your plan?. [online] Available at: http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/big-data-whats-your-plan [Accessed 21 Oct. 2016].
White, S. (2016). Study reveals that most companies are failing at big data. [online] CIO. Available at: http://www.cio.com/article/3003538/big-data/study-reveals-that-most-companies-are-failing-at-big-data.html [Accessed 21 Oct. 2016].
