Big Data is the big word in the boardroom right now. We’ve written on the topic before, interviewing business analytics professor Dr Kok-Leong Ong, and talking about how big data is used to monitor and predict public health issues.
Big Data – the collection of a wealth of complex data and analysing it to create new responses and programs to improve your business – isn’t just a matter of ‘if you build it, they will come’. All the data in the world is only so much stuff if you don’t know what you have or how to use it.
The Building Brick metaphor
However you collect information on your business, each bit of information is a building brick that contributes to an idea of how your business is operating, how your customers are behaving, and how your business and customers interact.
A billion building bricks in a pile won’t turn magically into a Palace of Awesome Ideas (or sixteen smaller Mansions of Brilliant Strategy, or whatever you hope to build). Half a billion of the bricks might be those dinky little 1×1 single-stud bricks, too fiddly to be of practical use. Maybe you have ten thousand of those cool bricks with hinges for making sculptures that move – but first you have to find them.
You need to know what bricks you have in the pile. You have to organise and categorise your material before you turn it into something amazing.
Why is Big Data a big deal?
You can’t make a house without bricks; which is to say, you can’t develop programs and strategies for success without understanding what’s happening in your business and what your customers are doing.
The ability to collect, collate, sort and analyse information is essential to understanding what has happened in the past, what’s happening now, and how to use that information to create innovative, targeted programs to grow your business in the future.
New Research: How to succeed with Big Data
McKinsey&Company found in 2014 that many executives felt they were getting poor economic return from investment in big data initiatives like data warehouse and analytics programs. McKinsey then conducted in-depth research to determine the returns on big data investments and how they were achieved, looking at 714 companies around the world.
The results, published in 2016, indicate that return on big data investment reflected similar IT investment cycles from the past, with returns improving over time. The three greatest determining factors in successful big data investment were that early investment improved the benefits; the correct combination of IT and personnel skills was vital; and that large scale investment in skilled data and analytics experts was a must for successful implementation of a big data strategy. McKinsey&Company concluded:
Combined, these three investment characteristics account for about 80 percent of the operating-profit increases in our study. Staying on top of new developments, carefully balancing investments in skills and technologies, and becoming a magnet for cutting-edge talent will be the paramount considerations for leaders keen to turn their modest data-analytics gains into broader and more substantial ones.
Turning big data into big ideas
Your building bricks might also be considered as a billion thoughts, and you need to put the right ones together to spark a brilliant idea.
Some ideas look small but can have a big impact. For example, Turkish blogger Muge Arslan wrote in 2013 about a finance company’s HR data analysis that showed where sales staff had schooled, their school results and the quality of their references had no impact on the staff member’s performance. Instead, attention to detail, demonstrable success in previous jobs and previous selling experience were the significant factors. This insight changed the company’s recruitment process and reaped a $4m improvement in revenues.
Blogger Sean Madden wrote a few years ago about a positive business interaction, which was the result of a retailer’s use of his browsing and buying habits to provide excellent customer service.
Doug Laney, an analyst for IT research company Gartner, has examples of the uses of big data analysis across a range of industries. Ten of the best ones are presented on SearchCIO, including how an American police department was able to feed crime data in to a predictive algorithm to determine likely crime spikes, resulting in a one third drop in burglaries, and how a company involved in pharmaceuticals worked out the type of customers most likely to forget to take their regular medications and created new products to remind those customers when their next dose was due.
The top five tips
Big data analysis has a role in every industry, from retail and manufacturing to health care, personnel management and customer service.
Here are the top five things to keep in mind to make sure big data makes a difference to your business:
- Use specialist analysts
- Invest appropriately in IT, with your specialists’ advice
- Mine historical data as well as collecting new data
- Use different types of data analysis for different industries or activities
- Use the analysis innovatively and creatively to have the biggest impact on your business.
You’ve got all the pieces. Let the building begin!
Want to learn how to use Big Data? Read about our new Master’s of Business Analytics course.
Image: Lego Heads by Diogenes_3