Big Data, Big Opportunity
02 December 2013
Big Data, and its close cousin the Internet of Things, are among the trendier terms of 2013. They can sound geeky, but they are developments that every manager needs to understand. They are transforming each and every business model. Companies that just leave these matters for the IT department are most likely doomed.
At the C-suite, businesses need not only a data analytics strategy, but a data-analytics culture, researchers from McKinsey have concluded. It often helps if the executive in charge is not from IT, but from operations or marketing, and that there are close links with customer-facing and other operational roles. And the tools provided have to be usable and relevant so people will actually enter the data that’s needed. The researchers concluded:
‘In our experience, many companies spend 90 per cent of their investment on building models and only 10 per cent on frontline usage, when, in fact, closer to half of the analytics investment should go to the front line.’
At least some of that investment should go on training for data-related skills. Worryingly, one recent survey indicated that while companies are investing heavily in Big Data, many employees lack data-mining and analytics skills.
But there’s still a big question for a lot of people. As speaker Bernard Marr put it at CMI’s National Conference: “what the hell is Big Data?” Some people find it frustrating. It can be mis-used – for example for ‘snooping’ on customers or staff. But the real opportunities lie in building a deeper understanding of marketplaces and an organisation’s interaction with them. Big Intelligence might be a better term.
It offers the potential to enhance services, consumer trust, and even workplace relationships. Google, for example, uses human capital analytics to encourage a coaching style among managers – because the analysis reveals this to be the most effective leadership style. In a similar way, the pioneering economist Haig Nalbantian at Mercer analyses correlations between strategic people decisions and business results. This often encourages an enlightened leadership style – illustrating the profitability of employee engagement and product knowledge in customer-facing staff, for example.
Rahul Merchant, data commissioner for the city of New York, recently announced a ‘revolution’ in accountability, through big data. Building inspections are replaced by continuous live information on the conditions of individual buildings. Information on noise, crime levels, rubbish collection and so on by locality will become increasingly accessible. Seattle has partnered with Microsoft and Accenture to optimise energy use – featured in this report on big data use by different cities. Keen to keep up, the UK Government earlier this year published its Information Economy Strategy, which called for a highly trained digital workforce, as well as a strong infrastructure.
Of course, Big Data has also created new concerns about privacy. Last month the supermarket giant Tesco announced a partnership with a technology firm Amscreen aimed at improving the targeting of its advertisements. It was mainstream news, not just a snippet in the Business section. The reason? The new system involves photographing customers, and gathering demographic information in real time.
Big Data poses challenges that have to be addressed by all areas of responsibility of a company: legal, ethical, marketing, personnel, risk management and financial. If the company declares its use of Big Data is restricted to monitoring trends, not storing personal information, it has to keep to that promise. And of course there are ethical and legal considerations to consider with trading data.
The Internet of Things is also bringing about radical change. It refers to machines that ‘use’ the internet, which can be parking meters, street lights or GPS sensors. More connected devices means potentially more entry points for hackers, as noted in a recent survey of IT professionals by the Information Systems Audit & Control Association (ISACA).
But some of the opportunities are transformational. Sensors linked to the internet can track and monitor all manner of business-related activity in real time. One example is the capability to slash energy use. Sensors mean that an object on the production line always arrives in an optimal position, reducing waste, energy costs and human intervention. In medicine, doctors can track the condition of a vulnerable patient remotely, and in real time. Car insurers can use sensors to track whether someone actually is a safe driver, rather than use inaccurate proxies like age and gender.
Ultimately, technology has to serve us, not the other way around. There is no point developing vast systems that gather deep information that is rarely, or ineffectively used. Used intelligently, Big Data and the Internet of Things can help us be green, boost profits, and even improve our working relationships.
Submitted by Matt Smith