True value of Big Data

As per the definition from informatica.com, Big data is the confluence of the three trends
consisting of Big Transaction Data, Big Interaction Data and Big Data Processing. With so
many big-s in the definition, is Big Data a big deal then? In my opinion, being a big deal or
not depends on the value that Big Data can create, which can be calculated by dividing the
sum of economic and social benefits by the sum of monetary and non-monetary costs.
sts monetaryCo Non sts MonetaryCo
fit SocialBene nefit EconomicBe
Value




Economic Benefits
A McKinsey research
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claimed that big data can create significant value for the world
economy, enhancing the productivity and competitiveness of companies and the public
sector and creating substantial economic surplus for consumers. Those are undeniably
economic benefits created from the 3 main streams of Big Data: Big Transaction Data, Big
Interaction Data and Big Data Processing.

Big Transaction Data:
By analysing variability in transaction data such as sales volume, inventories or staff
turnovers, Big Data Analytics can identify if the cause is natural or intentional, helping
managers to better manage risks as well as performance. The accumulation of transaction
data also enables the emergence of data aggregators with high potential growth. Data
aggregators are companies that interface with a large number of consumers with a wide
range of products /services, or the coordinator companies in the supply chain that liaise
with different parties.

Big Interaction Data:
By monitoring interaction data including people to people communications via social media
data as well as people to machine connections via sensors, Big Data Analytics can
dynamically recognise real-time customer segmentations, even before customers are aware
of them. This is due to the fact that a persons value may change due to certain events or

1
McKinsey, Big data: The next frontier for innovation, competition, and productivity, June 2011
incidents in life that he may yet be aware of. This will bring substantial advantages for
targeted marketing and promotions campaign. In addition, analysing existing customers
usage data of the current products enable the company to customise the products
functionalities to the customers particular needs. In addition, existing customers usage
data also provides insights on how to re-invent for new products and new biz models while
continuously upgrading and improving after-sales services.



Big Data Processing:
By processing raw data and then allowing accessibility of relevant processed real-time data
to relevant stakeholders, Big Data Analytics enables concurrent business processes,
improving productivity and cutting down time to market. Moreover, Big Data Analytics gives
valuable insights that help automate and optimise decision making process. The next trend
in the future could be setting value-based pricing of the same product based the real-time
customers perception about the benefits of the products.

Apparently, Big Data is emerging as a key tool for companies to compete and outperform
their competitors. Although the effort of building the capabilities for Big Data will take time,
its benefits are magnificent.

Social benefits
On the other hand, consumers nowadays are much delighted by the better match between
the product functionalities and their deep-rooted needs. Big Data Analytics in healthcare
and public sector not only helped improve health conditions but also enable higher-quality
social engagement. Moreover, real-time traffic information and mobile location-based
navigation systems are savers for the challenging traffic problems in all developed cities,
saving citizens on time and efforts navigating and travelling. Those are just a few examples
of a few aspects of life. The social benefits, involving all aspects of the social life, may
therefore exceed the economic benefits tremendously.

Monetary costs
It takes great time and effort to build Big Data capabilities. Due to the shortage of Big Data
talents, who are specialising in statistics and machine learning and who are capable of
managing the companies using insights from data analytics, Big Data capabilities are
expensive to develop in terms of time and money. In the same study mentioned earlier,
McKinsey projected that demand for positions with Big Data capabilities could exceed the
supply by 140,000 to 190,000 positions. On the one hand, availability of data can be
expensive to collect, especially valuable data. This allows the high growth of data
aggregators. The ability of managers to ask the right questions and effectively comprehend
the results of data analytics, on the other hand, is vital. This challenging ability takes years
to develop and fine-tune.

Non-monetary costs
The non-monetary costs, involving all facets of life, can impose huge barriers to fully utilise
the potential of Big Data. Growing public concerns over privacy and data security are the
biggest challenges. The more sensitive the data such as health records, the more significant
the benefits that consumers can enjoy if such data can be used efficiently, such as to
identify disease early for appropriate medical treatment. It is undeniably the trade-off
between non-monetary costs of privacy invasion and economic and social benefits of Big
Data. On the other hand, the rising trends of leakages of important data of not only personal
and company confidential information but also national secret documents, such as the
Snowden case, raise public awareness of huge threats of both privacy invasion and data
security. Global surveillance going underground for many years without the publics
knowledge is debatably a scary fact of privacy offense. Despite the mighty purpose of
serving the nations security, it is questionable if it is ethical to put surveillance on the public
without its knowledge. Furthermore, if such data falls into the hands of the villains, the costs
will be many folds. To sum up, the recent incidents of national data breaches post enormous
concern about data policies and securities that would need to be enforced by both hacker-
proof technologies and the law.

Neelie Kroes, Vice-President of the European Commission responsible for the Digital
Agenda, claimed in his speech that knowledge is the engine of our economy. And data is its
fuel.
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. It is especially true for the modern knowledge economy. As fuel, Big Data is an
important factor to drive the economy forward. If we do not use fuel, the engine
knowledge cannot run. If we use the wrong fuel, we cannot make full use of the engine
knowledge. In conclusion, by analysing the value of Big Data in the traditional benefits and
costs model, I am certain that future competitive advantages will accrue to companies that
are capable of finding the optimal balance between costs of privacy invasion and capturing
more and better data and the economic and social benefits of using such data efficiently.



2
http://europa.eu/rapid/press-release_SPEECH-13-450_en.htm