The Benefits of Big Data
Thomson Reuters has posted the transcript of a thought-provoking presentation by Russian investor Yuri Milner.
Milner begins with an example of how quickly the internet has changed how the world operates. It has taken two days, he says, to create an amount of information equal to all information generated by mankind, beginning with the first cave drawings, in the 30,000 years prior to 2003. Ten years from now, that same amount of information will be generated in only one hour.
Tech-savvy, innovative leaders should see vast potential in these developments. As Milner points out, internet businesses already tend to be more efficient than traditional offline businesses, capable, on average, of generating revenue of $1 million per employee compared to $100,000 to $200,000 typically generated by offline counterparts. He uses the example of Facebook, a company in which he was an early outside investor. The 700 engineers at Facebook support more than 750 million users, an unprecedented level of efficiency.
A study from McKinsey Global gives evidence of the value of this “big data”. A McKinsey study found five broad ways in which using big data can create value:
- Unlocks value by making information transparent and usable at much higher frequency.
- Provides more accurate and detailed performance information on everything from product inventories to sick days, exposing variability and boosting performance.
- Allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services.
- Can improve decision making through sophisticated analytics.
- Can be used to improve the development of the next generation of products and services.
To fully capitalize on data, firms face several issues. In addition to privacy, security, intellectual property, and liability questions, there is expected to be a shortage of managers and analysts capable of effectively using big data.
Reader Comments
You quote Milner as saying "It has taken two days to create an amount of information equal to all information generated by mankind..." I personally think that this is a ridiculous notion and fails to draw the distinction between data and information.
In fact most of this internet data is noise and no more information than the sound of the waves washing up on the shore. Even ignoring the questionable morality and legality of processing personal data, the problem of distinguishing true from false would be overwhelming.
Posted by kevin on October 18, 2011
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