Big Data.
Analytics.
We've all heard the buzzwords.
But what do they really mean?
And how can they help your business?
Let's start with definitions.
Big data refers to the vast volumes and types
of information that companies can now
collect and process using increasingly high-tech systems.
This comes from both internal sources --
within your company -- and external ones -- customers,
suppliers, and the broader market.
It is both structured -- such as customer purchase data from
retail stores -- and unstructured --
such as Internet search results --
though all data has to be put into structured formats to be
analyzed.
Analytics is the use of math and statistics
to derive meaning from data in order
to make better business decisions.
There are three kinds of analytics.
Some are descriptive -- for example dashboards,
scorecards and alerts.
They tell you what happened in the past,
but not why it happened, or what might change.
Predictive analytics are more useful:
They use past data to model future outcomes --
perhaps indicating how customers will respond to a marketing
promotion or how sales will be affected by certain market
conditions.
Even better are prescriptive analytics,
which use techniques like optimization or A-B testing
to advise managers and workers on how best to do their jobs.
They might tell a TV salesman the right discount to offer,
a web designer which type of ad will elicit more clicks,
or a truck driver where to stop for gas.
When you combine big data with effective analytics,
you have what Babson College professor Tom Davenport
believes to be a key competitive advantage for organizations
today.
What capabilities does your organization need to succeed?
One approach is the DELTA model: Data that is clean, accessible,
and often unique to your company.
An enterprise-wide focus, with key data systems and analytics
resources available to the whole firm, not just isolated teams.
Leaders at all levels that promote
a data-and-analytics driven culture.
Targets for key business areas that
could benefit from this approach.
And talented analysts to execute the strategy.
In a complex and dynamic business environment,
big data and smart analytics are more than buzzwords.
They're an important way to improve decision making
and ensure that your company is a step ahead
of its competitors.