Does Big Data Analytics Perform A Supporting Role Or Provide Strategic Advantage To Organizations?
Big data is an enormous collection of data and knowledge gathered from both traditional and digital sources, and is used as a source for companies discovering facts that they do not know and for resolving problems (Arthur, 2013, p. 1). Although there has not been any study that can rigorously prove that the business performance can be improved by intelligently using big data, big data is still evaluated as a sphere triggering management revolution, and the value of being data-driven is demonstrated by anecdotes and case studies (McAfee & Brynjolfsson, 2012, p. 63). The study conducted by McAfee and Brynjolfsson showed that companies who characterized themselves more as data- driven were, on average, 5% more productive or 6% more profitable than their competitors (McAfee & Brynjolfsson, 2012, p. 64).
People usually think that ‘big data’ is as same as ‘analytics’; however, although they are related, there are three key differences between them, which are volume, velocity, and variety (McAfee & Brynjolfsson, 2012, p. 62). These three unique characteristics of big data fundamentally facilitate an organization to formulate more personalized strategies and stay competitive among their rivals. Currently, there are massive amounts of data existing in our life. Statistics showed that there are approximately 2.5 exabytes of data generated each day since 2012, and that number even doubles every 40 months (McAfee & Brynjolfsson, 2012). On the other hand, the forms consisting big data are various, such as message, image, GPS signals, etc. (McAfee & Brynjolfsson, 2012, p. 63) These facts provide organizations an opportunity to radically know and measure more about their business (McAfee & Brynjolfsson, 2012, p. 62).
Examining the ways in which Sears Holdings generated personalized promotions shows the advantages of companies using big data. What Sears did was to collect, store, and analyze this huge volume of data by using the Hadoop cluster (McAfee & Brynjolfsson, 2012, p. 65); the benefit brought by big data is allowing Sears to comprehensively understand their customers, so that the company can generate these higher-quality promotions that better fit their customers’ interests and needs.
Moreover, real-time information is certainly valuable in this fast paced life; the third characteristic, velocity, can provide strategic advantage of an organization (McAfee & Brynjolfsson, 2012, p. 63). McAfee and Brynjolfsson (2012) used two examples to demonstrate this concept in their report. One example is that, by using the location data that indicated the number of people parking in its retails’ parking lots on Black Friday, Macy’s could possibly predict its sales amount even earlier than the time that they recorded these sales (p.63). The second example is that, after using RightETA, the airline provided better customer services and eliminated operational costs by better estimating its flights arrival time (McAfee & Brynjolfsson, 2012, p. 64). These examples demonstrate that companies can collect information faster than ever in order to have better predictions and make proper decisions.
Big data can be supportive of an organization strategy’s formulations; however, managers must still face both technical and managerial challenges in order to fully and effectively utilize big data’s power (McAfee & Brynjolfsson, 2012, p. 66). Suggested by McAfee and Brynjolfsson (2012), there are five areas — leadership, talent management, technology, decision making, and company culture — of which managers should particularly be aware. In general, managers should realize that 1) there are more requirements for being a qualified manager now than there was before big data began to influence industries; 2) the demand of data scientists who can communicate in the language of business is increasing; 3) experts with a technical skill set of integrate relevant internal and external data sources are demanded as well; 4) the cooperation between people with different backgrounds becomes common; 5) company’s culture will shift from “what do we think” to “what do we know” (p. 66). In fact, although there are many barriers still waiting to be conquered, big data has already been providing strategic advantages to organizations in many industries.
Bibliography
Arthur, L. (2013, 8 15). What Is Big Data? Retrieved 10 17, 2014, from Forbes.com: http://www.forbes.com/sites/lisaarthur/2013/08/15/what-is-big-data/
McAfee, A., & Brynjolfsson, E. (2012). Big Data: The Management Revolution. Harvard Business Review.
