BIG DATA: The analytics revolution

Juan José Casado. Academic Director of IE’s Master of Business Analytics & Big Data. IE Business School

6 May 2014

Insurance companies that lower the cost of their services because cars that come fitted with sensors can identify good drivers or companies that can forecast demand using social networks. These are just a couple of examples of the revolution that is on the way.

Nobody can have failed to notice that we are immersed in the greatest explosion of information in the history of mankind. Statistics reveal that 90% of the information that currently exists worldwide was generated in the last two years, and this trend is growing exponentially. The birth of an interconnected society where social networks place people in contact with each other, where people are always connected to a range of mobile devices, and where machines have also begun to be connected to each other in order to exchange information, has brought about the digitalization of every aspect of human activity.

This digitalization is generating mountains of data, most of which is not structured, in the form of web registers, videos, voice recording, photos, emails, posts… and they are there waiting to be exploited. Successful companies like Google, Amazon, Facebook, Yahoo or Twitter have based their business model on developing the capacities needed to analyze this data and to acquire a differential level of knowledge that will afford a sustainable competitive advantage vis-a-vis their competitors. In order to achieve this they have had to develop a new technology ecosystem which permits them to analyze large volumes of data that is extremely varied in its form or structure, and to do it at high speed, using an ecosystem that has come to be known as big data technologies. Big data is being talked about a great deal and revolves around the Hadoop-based open source project.

The success enjoyed by these firms has spurred on more traditional industries – banking, retail, telecommunications, energy, FMCG – to ask themselves how these new technologies can provide the key to the enormous sets of data to which they have access, bringing new solutions to old business challenges, transforming their processes and developing new organizations equipped to take decisions based on data analysis. Banks that analyze our consumer habits in order to recommend how we should manage our personal finance, insurance companies that lower our insurance fees if we place a sensor in our car that can show we are good drivers, or large distribution companies that are capable of predicting the demand for a product by analyzing the number of people on social networks that are talking about it. This is just the tip of the iceberg of how big data can transform different industries.

But this analytical revolution does not only affect the business world, it is changing our entire society. Obama won his first elections thanks to the development of a system that permitted him to monitor social networks and adapt the content of his addresses in accordance with the specific needs of the places he visited, artificial intelligence systems help medical professionals to diagnose  illnesses and detect epidemics earlier each day, modest baseball teams achieve spectacular results thanks to the mass analysis of players, and music apps analyze our tastes in order to know what song we would like to listen to. These are just some examples of how the analytics revolution is present in our day-to-day lives, and gives us an idea of what the future might have in store for us.

As this analytical revolution gathers pace and looks set to take over, companies like Gartner estimate that 5.4 million jobs will have to appear worldwide between now and 2015 to make it happen, and McKinsey already pointed that one of the biggest challenges facing companies over the next few years will be that it will be difficult to find professionals in the labor market with the kind of analytical skills they need.

In the face of this unstoppable growth in demand, it is not surprising that Harvard Business Review recently proclaimed that the profession of “data scientist” would doubtlessly be the sexiest profession in the twenty-first century. Hence, if you have sons or daughters who are currently thinking about what to study, you know what could be a go.

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