Big data refers to massive, rapidly growing amounts of wide varieties of data. The data can come from a number of sources, such as social media profiles, real-time purchase behaviour in online stores, online text data and photographs, and open municipal data on populations and land use.
LUT University's Ossi Ylijoki wrote a dissertation on this software engineering related topic. He states that big data can be utilised to promote business. For example, the millions of activity trackers in use as we speak collect information on people's lifestyles and heart rates as well as demographic and location data. All this is stored in a cloud and can be used to develop health and well-being services and advance medical research.
"Big data provides companies with detailed information on how people use their products. Data can help to target products and services to specific consumer groups. Data can even accelerate the traditional product development cycle by 60 per cent", outlines Ylijoki.
According to Ylijoki, big data carries widely recognised potential to develop business activities.
"Large-scale listed companies operating in Finland understand the importance of big data and are familiar with the concept. Big data is, nevertheless, regarded from a limited perspective rather as a means to improve internal efficiency than as a source of new value and business models."
A goal must be set for data utilisation
How can big data translate into growth in a business? Firstly, goals must be set for its use. In addition, for product development, the aim may, for instance, be to collect data on customers' expectations, to develop the company brand or to create a new sales strategy.
"Data can be used to uncover information that requires the company to take a different approach to, say, the supply chain. The data can steer decision-making," Ylijoki summarises.
Obviously, the company also needs the actual data.
"People often think that a hired consultant merely steps in and identifies the useful data, but the fact is that the people in the company must be familiar with the data. It is available in the company's own systems and the ecosystems in which the company operates."
Utilising the data to achieve certain goals requires new type of know-how from the corporate organisation, including skills in analytics and algorithms. The applicable algorithms are created based on an analysis of the collected data.
Big data is a production factor, not a by-product
In addition to a vast amount of data, analytics and algorithms, the utilisation of big data requires practical operating models. According to Ylijoki, analysed data is useful in operational work only if it is incorporated into everyday processes and tools.
"Many jobs contain routine decision-making. Good data and algorithms help to automate decision-making. This has already been done in the financial world to decide whether to grant loans."
The transition to an organisation that utilises big data does not take place overnight. The management must take the lead and drive the transition.
"It's a comprehensive and time-consuming transition for the organisation to be able to view data as a production factor and not a by-product. Big data is not an exercise in computer science," states Ylijoki.
For practical actors, this change requires that instead of printed forms, all organisational departments collect, for instance, customer data in the same way into electronic systems.
"In simple terms, if the data resides in scanned documents, its utilisation is problematic. The processes remain manual and you can't really call it digitalisation," Ylijoki says.
Data belongs at the core of business
Ossi Ylijoki emphasises that an organisation must pursue shared goals in order to make the data flow upwards from their silos. No algorithm helps if there is no data to analyse. Also investments in the renewal of operations may be futile if the company does not trust data.
"One fourth of managers rather rely on their intuition than facts when they make decisions. However, contemporary big data analyses focusing on the recent past are usually trustworthy no matter how much practical experience you have in the given field," Ylijoki says.
Digitalisation is picking up speed. It helps us to operate resource efficiently, saving natural resources. According to Ylijoki, it is up to the company whether it stays in the game.
"Big data can lead to the creation of new value and business, but it is first and foremost a tool for developing existing business. We can say that the organisational culture has shifted when big data is at its core."
The utilisation of big data in existing business activities requires that:
- management understands and commits to the use of data.
- big data is in a utilisable format and of a sufficient quality.
- the company possesses technical expertise, such as analysis and algorithm skills.
- the organisation is willing and able to utilise data.
- the company is aware of related risks and uncertainties. In addition to data and organisational factors, the business advantages yielded by the utilisation of big data are determined by the ecosystem and competitive setting in which the company operates.
Olli Ylijoki's dissertation: http://lutpub.lut.fi/handle/10024/159246