Big data, big potential
We have heard a lot about it but is it just a buzzword? Here are six ways in which big data is being used in business and society at large.
When analysed appropriately, [big data] allows us to make predictions about the future, and can thus improve the quality of decision making.
Never before has the world had access to so much data from so many different sources.
From mobile phones and computers to credit card and loyalty card transactions, social media, wearable devices and sensors in machinery and buildings, society is generating data at an unprecedented rate. Around 90 per cent of the data that exists in the world has been generated within the past two years.
Now advances in computing allow us to process data much more quickly, we can use all this information to identify patterns and trends and gain new insights in real time to inform decision making.
Associate Professor Marta Indulska, a business information systems expert with UQ Business School, says: “Big data can provide us with a greater understanding of what is going on around us, both in business and society. When analysed appropriately, it allows us to make predictions about the future, and can thus improve the quality of decision making and be the basis for improving efficiency and effectiveness of processes. However while some businesses are reaping the benefits, others still don’t realise the potential.”
According to ABI Research, global spending on big data exceeded AU$40.2 billion in 2013 and will reach AU$148 billion in 2018. So what is this money being used for? Here are six of the main applications:
1. Customer profiling
By analysing customer data, businesses can gain a better understanding of current and potential customers’ buying behaviours and predict their future needs. Companies’ own data can be combined with data from social media and other external sources to gain more powerful insights.
“Big data has allowed companies to identify patterns of customer churn, so they can now spot customers who are at risk of moving to another supplier and design interventions to retain them,” Dr Indulska explains.
“Retailers can also use it to identify customers at different stage of their life and have a better idea of what products they might be interested in. With various sources of data, the opportunities for insights are broad.”
2. Operational efficiency
By forecasting demand more accurately, businesses are able to meet demand while limiting waste – they can develop a clearer idea of the product inventory they need to supply or manufacture and ensure they order the right amount of stock or raw materials at the right time.
Predictions can factor in seasonal variations in demand and can be updated in real time to take account of market changes, weather forecasts or one-off events likely to affect demand.
Big data also allows companies to improve logistics by planning routes more effectively and designing more effective distribution networks. Through the use of radio frequency identification (RIFD) tags, products can be tracked en route and, by incorporating up-to-date travel information, consignments can be rerouted to avoid bottlenecks or delays.
3. Equipment maintenance and design
A typical jet engine creates 20 terra bytes of data per hour. By combining data from many thousands of flights and taking account of conditions such as temperature and air pressure, operators can more accurately predict when parts are likely to fail. Such insights allow preventative maintenance to be carried out at the right time, thus reducing costly downtime. The analysis of data created by machinery, such as a jet engine, can also inform the design of machinery in the future.
In mining, another industry requiring heavy investment in complex equipment, big data is helping to reduce costs and improve safety. Sensors built into the machinery send signals back to systems that monitor operations in real time. By adjusting the settings to match the conditions, mining companies can optimise drilling performance and help prevent breakdowns.
4. Smart cities
Harnessing information on traffic, utilities and other municipal services could help to reduce congestion and allow more effective operation of cities. Already the signals from GPS devices and mobile phones can be used to detect traffic congestion, allowing transport authorities to adjust traffic lights and signage and, in the longer term, to design better road and public transport networks.
However the real potential for smart cities will come from further development of the ‘internet of things’ – the practice of embedding sensors into everything from lampposts and water mains to bridges and buildings. According to the market research firm IDC, 9.1 billion units were installed by the end of 2013 and this is expected to rise to 28.1 billion by 2020.
This practice of embedding sensors will create a vast new source of data, which has the potential to generate a wealth of new insights, for example helping to reduce energy use in buildings or identify water leaks, and improve overall quality of life for citizens.
5. Health Informatics
The growing adoption of wearable technology is generating a wealth of information on everything from our heart rate to our exercise habits. Having access to this data gives medical scientists much greater and more accurate insights into our health and fitness, which helps to design better interventions.
“My smart watch records the amount of time I spend sitting, sleeping or walking, my internet-enabled scales record my weight and percentage of body fat, while my Bluetooth-enabled blood pressure monitor syncs to my smartphone to record my blood pressure readings,” says Dr Indulska.
“While these are separate data feeds, they can be integrated for greater insight. The availability of data like this makes it far easier for researchers to collect information and also is more accurate than relying on volunteers to remember and record their activities.
“On a wider scale, analysing data from medical and hospital records could lead to major advances in medical research and can assist in identifying risk factors and understanding best practice for treating specific conditions. However, as with some other big data applications, it is a controversial area, with campaigners claiming it is a threat to patient confidentiality and civil liberties.”
6. Winning elections
Clever use of big data is credited with helping Barack Obama win the 2012 US election. Obama’s team merged information from previous campaigns with demographic databases to identify ‘swing voters’ and buy media time to target them. Since then, politicians worldwide have taken note.
Parties are now using big data to get a better understanding of public sentiment, inform their policies and election strategy and agree key messages to target different types of voters.
Canvassers can identify these different types of voters according to their postcode and focus on those areas or streets that are crucial to the outcome of the campaign.
According to Dr Indulska, as big data becomes more widely adopted, there will be a growing demand for skills.
“There is plenty of data available but if we are using it to inform our decision making, we need to be sure the underlying data is reliable and that we are analysing it appropriately,” she says.
“That requires people with the skills to judge whether data is of sufficiently high quality for the purpose required, understand how to integrate it with data from other sources and which approaches are most appropriate, given the type of data, to create insights. Ultimately data analytics skills are the key to unlocking the power of big data.”