Big Data in the competitive market
A manager asked: “Is there a better way to explain Big Data? Many people are talking about it but I do not see a need or any benefits for it? Please explain.”
Answer: The term “Big Data” is used to describe a situation where the volume of the data is much bigger and more complex than the current storage place or the tool that uses to process it. In the past, most data are defined, collected, organized and stored in database where data management tools can access, update, analyzed and organized them into valuable information for business intelligence purposes. Today most business processes are automated; the internet connects everything; and more people are using social media etc. there are a lot of useful data that can be mined for business intelligence. However data from the internet, social media, mobile, computing, signal sensors etc. are not defined, some are structured but many are unstructured, it cannot be mined using current data mining tools. Since there are too many of them (Volume); from many sources (Varieties); and they change very fast (Velocity), it is very difficult to define, collect, store, access and organize using traditional database or tools to gather valuable information for business intelligence purpose.
Traditionally, every company collects business data such as revenues, costs, sales, profits, customers, suppliers, and market trends on a daily or weekly basis. Today with process automation, these same data come in rapidly every second, every minute, or hour so they overwhelmed the storage and the software tools that process them. To analyze these massive data amount and to separate the “valuable” data from the “noisy” data requires different approach, different type of storage, different method, and different tools and that is why people called it “Big Data Analytics”.
Big Data has many benefits but the most obvious is it gives decision makers valuable information for business advantages that traditional business intelligence cannot do. When on line business (e-business) started several years ago, companies collected data such as revenues, costs, and transactions automatically because everything is done by a computer. Most companies are using these data for management decision such as raise price, drop price depending on the demand and supply. However some companies go further by analyzing these data to learn more about the buying habit of customers to create business advantage. For example, Amazon collects all customers’ purchases orders, analyzes them and knows more about customers’ buying habit. Amazon know what customers like, what they want then recommends them to buy more by having suggestion such as “If you buy this and then you may like this …” or “Most customers who buy this also buy that …” Today Amazon have petabytes of data collected in their IT systems. With hundred million of customers access and buy things they have everyone buying habit and know what they want so they will send emails directly to them to advertising only on what they like and increase sales by 45% in just few years using Big Data analytics. By knowing about customer and what they want Amazon was able to eliminate most competitors and dominates the online business. Today Amazon has become the number one on line company in the world.
With social networks, companies can collect additional valuable data by knowing who is talking to whom in the social network and understand the trends among these people, what they like, what they are concerned with etc. All of them could be potential customers for the business; With credit card purchasing data, companies can collect data on who are doing business with whom and solicit additional customers; companies also collect data on websites that people are visiting via their mouse click to identify potential customers and advertise their products accordingly; companies collect data on who are influencing by certain advertising via advertising click to determine which advertising is more effective; companies collect data on where customers are standing in a store via mobile GPS location data to send text messages and give them special deal to get them buy more and so on. By having all data collected and analyzed, companies can develop certain business advantages so they can sell more effectively.
Today airline, hotel, car rental, vacation tours, etc. all have tried to improve their business by using Big data to predict pricing, customer comments, recommendations, market trends, etc. Without a sophisticated real-time Big Data analytics, companies can not compete effectively in this highly competitive world.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
