Why use big data in decision making for your business?

Introduction:

If you are not familiar with anything in the title of this article, fear not, I’ve got you covered. Big data simply describes huge sets of data that can be structured or unstructured. We are not concerned with the amount of the data, but with what information we can get from this data, so that it can help us improve various processes. Big data can play a vital role in the decision-making process of an organization, as it provides concrete facts that could help us make the right decision. This article is all about digging deep into the world of Big Data and how an organized piece of information can help us make the right decision.

Decision Making For an Organization:

According to a recent study, we create 2.5 Quintilian bytes of data each day. Organizations have access to various kinds of data collected from sources such as websites, business applications, social media platforms, blogs, documents, archives and many more. But all this unstructured big data is useless if you can’t use this data to add a positive impact on your business/organization. We have to sort this data and apply some machine learning algorithms so that we would be able to find out that what this data is trying to tell us.

When it comes to business decisions, it would be difficult to exaggerate the value of manager’s experience and intuition especially when hard data is not at hand. As described earlier, there are petabytes of data generated every day that are available freely to everyone. It would be foolhardy to make a decision without drawing meaningful insights of such data. According to one academic study, organizations performed 5–6% better when they rely on real-time data for their decision making process than those that solely rely on intuition and experience for their decision-making process. Let’s see some of the real world applications of how organizations are using big data to improve their decision-making process.

How Big Data Is Being Used?

Wellpoint Health Services has more than 34 million members. They make sure that their customers receive the right treatment with minimal to no errors. But handling all their members’ data is a big feat, since there are terabytes to be sorted and organized. Millions of medical research papers, patient records, population statistics and formulates have to be analyzed. Using them to make an effective decision requires powerful computing as well as the correct algorithms. Applying incorrect algorithms to data sets can produce wrong results. So organizing data is not the only important step, but choosing the right algorithm is also part of the game.

A survey was conducted among big organizations asking them which big data sets play a major role in their decision-making process. Here is a short summary of that study;

1. 69% of the survey respondents agreed that business activity data such as sales, purchases and costs add the greatest value to their organization.
2. A staggering 71% of the respondents agreed that the point of sale data is the most important to them as markets are in strong competition to keep the prices in check.

With smartphone apps such as Red Laser and Amazon’s Price Check, customers can scan the bar code of a certain product and immediately find out if the same product is available at a lower price elsewhere. It is not just the data that is important. It is about finding the right data and gaining correct insights from the data.

Now let’s discuss some of the other data sets that are as important as the ones mentioned above.

32% of who took the same survey agreed that official documentation such as emails and document stores are considered the second most important major data sets. Some companies also suggest that social media is the second most important data set. That’s because they think that using sentiment analysis on social media data can give some useful insights into customer behavior and their attitude towards a certain product.

Big Data and Social Media:

It is now time for us to explore a little deeper into social media as to understand how social media activity can give a useful insight to an organization about our perception regarding a certain product. Almost all organizations now have their own Facebook page where people can post their product reviews and opinions. In this way, they are vulnerable to brand damage. Social media is often used as an early warning system to alert firms when people are turning against them.

In 2011, it took Verizon just one day to roll back the decision of charging $2 from users who pay bills using their smartphone which was a consequence of all the criticism they received on social media. In this instance, customers used Twitter and other social media to express their anger over this unfair charge. So now, you have a clear idea of why social media data sets are very important in making big business decisions.

How Much Data Is Enough For Decision Making?

So far, we’ve been discussing big data and how it supports decision making. We have discussed the types of data sets and what type of big data is important for decision making. But have you ever wondered about how much data is enough for satisfactory analysis?

For example, if there is a population of 100 people and only 10 people participate in a survey, would the results of that survey be applicable to the other 90 people? Of course not, because there was not enough data to reach a firm conclusion. This is just a small example, but the same applies to when you have huge terabytes of data to be sorted and analyzed. The more data is sorted and analyzed, the more accurate it would give the results. Also, the amount of data to be gathered depends on the complexity of the problem at hand.

GE software’s vice president Bill Ruh points out that the more data we have, the more we get innovation in those analytics and we begin to do things we didn’t think we could do.

Conclusion:

We’re now familiar with big data and how it plays a very important role in decision making. We live in a world where data is generated every second and organizations are using this data to improve their business processes and to cope with the competition. One can be sure that using big data for decision making will lead to better decisions, better consensus and subsequently better execution. It is definitely a place to explore for any business for it’s growth.

(This article was authored by Research Nest’s Technical Writer Zeeshan Mushtaq)

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