Big Data: The Analytics Impact
“Big data” is surely the hottest topic in technology and digital circles these days. Because it’s way up on the hype cycle, the concept could use a little breaking down. When we talk to clients about big data, they usually have two main questions:
- What is big data, really?
- What does it mean to my business?
Broadly speaking, big data is a nebulous term referring to the astronomical amount of raw information being created by a wide range of sources, from biotech and genomic research, to environmental sensors and transportation monitoring systems, to social media and mobile devices. This is in addition to the already considerable data volumes that come from standard business systems – CRM, ERP, finance, supply chain and the like.
The bottom line is that more data is being generated faster and through more inputs and sources than ever before. Combined with the variety and unstructured nature of much of the data streams, standard data storage and management systems (to say nothing of analytics tools and technologies) are having to evolve at an incredibly rapid pace. New terms, like “exabytes” and “petabytes” are being coined to quantify the volume.
Big data moved on to the radar screens of many analytics and technology professionals last year when McKinsey released a report that made a big splash, thanks to a few bold claims. For instance, McKinsey claimed retailers leveraging big data could boost operating margin by 60%, while the U.S. healthcare market can save up to $300 billion annually. IBM’s significant marketing effort around its Watson supercomputer also dialed up the visibility of big data. Today, nearly every significant technology vendor is talking up its capabilities in the space.
For the vast majority of digital marketers and executives overseeing online business operations, the initial impact is likely to be pretty small. The rising tide of data is unlikely to shift the course of current digital analytics efforts, business intelligence and performance management efforts. We know this isn’t the most popular answer among industry pundits or trade show planners, but the fact is that very few executives out there are suffering from a lack of data.
I’ve been in analytics for 15 years and I’ve never heard anyone say, “If only I had more data …” In other words, today’s data volumes are already big enough to generate value through improved decision making. In some cases, current volumes are already overwhelming even skilled analytics practitioners. In this sense, we agree with Gartner’s initial take.
While big data is a significant issue, … the more important one is making sense of big data and finding patterns in it that help organizations make better business decisions.
One recent study found that 59% of digital marketers believe less than half of their Web analytics data is useful for decision making. Even more shocking is the large number of firms surveyed that had no links between analytics and their broader business strategies or their business plans.
Again, analytics leaders must stay focused on getting more from the data they already have and ensuring it means something and they can do something useful with it. Typically, that means identifying the best metrics to support the most important decisions the business needs to make. Starting with metrics aligned to drivers of business success is the way to filter out all the noise and irrelevant data (of which there is a ton). That means it’s an effective way to avoid being overwhelmed by the raw data. What do we want to learn from our data? Which data points give us the best insight into how our business is performing? These are the first questions to ask.
Further, success with big data will ultimately be as much as about people as it will be about technology. Again, this may be an unpopular view, but many companies would do better investing in the skills and knowledge in their organization than in the latest greatest “silver bullet” technology. This need is related to our previous point about metrics and key business insights. The best analytics software in the world can’t tell you the most important data points for your business; only a seasoned pro who understands the data as well as the business and can ask the correct question of the data can do that.
Yes, expanding (or exploding) data volumes represent an opportunity for many companies. Consider the fun (and slightly weird) correlations of data that will be possible. A consumer products firm may be able to learn that women over 40 prefer to buy shampoo on Tuesdays when skies are overcast. Theoretically, this would be a useful – if niche – insight. Figuring out which specific promotional campaigns drove more revenue and why would be more valuable, and that remains a struggle for many companies.
The point is, big data represents a huge challenge. IBM’s Watson may have done well on Jeopardy, but few firms are looking for game show tricks. Nor will big data be a game changer. There are too many other good insights to be harvested through company’s current data volumes – which we might as well start calling “small data” or “mid-sized data,” or better yet, “right-sized data,” as they are likely to offer bigger potential value than “big data” will anytime soon.
For more big ideas about the role big data could play in digital analytics, download our free big data ebook.