Is ‘Big Data’ Really for Everyone?
One of the hottest topics in business strategy and analytics right now is ‘big data’. Over the past year, big data has graced the cover of nearly every business periodical, and is quickly becoming the newest buzz word in boardrooms across the country.
Loosely defined as datasets with more than half a billion rows of data, big data analytics can provide powerful analysis and incredible insights into massive amounts of information, as accurately described in the most recent issue of CMA Magazine.
In his article, Jacob Stoller does an excellent job of describing in lay-terms how organizations can benefit from big data, how many fail to do so, and how Certified Management Accountants (CMAs) can help put such data into context and adapt these analytics into business success stories.
Stoller is absolutely correct that too many businesses ignore or fail to capitalize on the potential benefits of big data, but I would go further and say that even more businesses, both small and large, have failed to take full advantage of regular data. Understanding regular data, knowing what questions to ask, and being able to critically look at one’s own business are far more important ingredients to success for many organizations than a big data analytics package.
In her Forbes article, “What is Big Data”, Lisa Arthur takes a position that is becoming more and more common in business advice commentary by suggesting that every business must understand big data:
One thing is clear: Every enterprise needs to fully understand big data – what it is to them, what is does for them, what it means to them –and the potential of data-driven marketing, starting today. Don’t wait. Waiting will only delay the inevitable and make it even more difficult to unravel the confusion
It’s this sort of statement that turns a business concept into a buzz-word or fad. It’s a bit presumptuous to argue that ‘every enterprise’ needs to fully understand big data: does the locally owned coffee shop just opening their second location? What about the city-wide chain of sporting goods stores or yoga studios?
A much more powerful statement would take the ‘big’ out of it: every enterprise needs to fully understand their flow of data, and how to use data to inform their strategy and risk planning. For some organizations, this will mean the use of big data – for some it won’t. Think Starbucks versus Bridgehead.
The purpose of big data is to provide deep insight into company operations or relationships by allowing users to examine any number of variables in huge datasets. However, without first having a clear understanding of one’s business environment and a serious look at the required key ingredients to success and potential risks of critical failure, crunching through reams of data can be expensive and counterproductive for many organizations.
Know your Flow: How should your business look at data?
How does your organization currently use data to inform strategy and make decisions? If you cannot fully answer that question, how can you be sure that big data is the right approach?
As an effective test of the most basic uses of data, there are two questions any business owner or manager should ask themselves:
- What are the few things we have to do well to succeed in our industry or versus our competition?
- What are the few things (or lack of things) which could cause us to fail at our business or within our industry?
Most businesses should have a list of three to five items for each question, and most answers should come relatively easily, as these questions are designed to flush out factors that can be critical to the success or failure of an organization.
Once they have been identified, the next step is to decide what indicators or variables are the most important drivers of each of these factors. Once these variables have been identified, it is time to draw out the data by which such variables can best be measured and then interpret the results to inform overall strategy.
While far from a comprehensive evaluation of data analysis, this approach of moving from an identified key factor through a process of analysis, evaluation and introspection can be far more beneficial to many small and medium sized businesses than crunching through hundreds of millions of lines in a dataset.
The bottom line? Don’t get caught up in the latest technology fad for business. While big data analytics can provide valuable and meaningful insights for many organizations, asking the right fundamental questions and continually being critically introspective are some of the best tools a business can bring to bear.