Financial services, telcos & manufacturing to gain from big data analysis
Enterprises must embrace big data to increase top-line growth, bottom-line margins
THE term ‘Big Data’ has been bandied about for the past year and it means different thing to different people. In fact, according to enterprise software player Oracle, one of the barriers to adoption is the lack of the proper understanding of the concept of big data.
Kaleem Chaudhry (pic), senior director of Oracle enterprise technology, noted that there are many different definitions of big data today, similar to how cloud was loosely defined when it first emerged as a market trend.
Put simply, big data is a term that refers to the huge amount of unstructured data that is derived from the Web through multiple sources such as social media feeds from Facebook, Twitter, blogs, and other forms of data that cannot be fitted into traditional databases, where information is usually structured in terms of rows and columns.
Because this kind of data exists today, companies are beginning to find ways to apply advanced analytics to make the data intelligible and actionable, with the aim of using it to outperform competitors.
Kaleem acknowledged that this was part of the challenge for enterprises today, noting that it was important to address the challenges businesses face in order to gain the competitive advantage they need in today’s world.
“Big data is not new but the realization of its benefit and how it can help businesses is,” he told a media briefing Wednesday (Nov 18). “In fact, this is not only true of emerging countries like Malaysia but also more advanced ones.”
Citing data from a McKinsey study, Kaleem claimed big data has increased the value of the US healthcare industry by US$300 billion per year. It has increased the retail industry's net margin by over 60% and also decreased assembly costs in manufacturing by 50%, he added.
He also said that that according to Gartner, organizations integrating high-value, diverse, new information types and sources into a coherent information management infrastructure will outperform their industry peers financially by more than 20%.
Asked if these figures only reflected companies in advanced markets like those in the United States or Europe, Kaleem said that while the quantum of saving could be vastly different, there is no doubt that big data can help grow the top-line and increase operating margins in Asean countries, albeit in smaller amounts.
“These numbers [from McKinsey] are there just to set the extent of the benefits,” he said. “There’s nothing different from the banking or telco industry when comparing the US and Malaysia as it’s pretty similar. [So] if the overall healthcare sector in the US can benefit, the healthcare sector in Malaysia can also benefit, albeit not to that level, but there will be have some level of benefit.”
Quizzed on how big data would make an impact on different verticals, Kaleem gave three examples: One each from the financial services, manufacturing and the telecommunication industries.
Big data for the manufacturing sector allows savings in the form of assembly line optimization and efficient inventory management, he said.
“For example, a retailer with 200 stores could realize that product A is selling more than product B in certain areas. Also, when product A sells well, product D also sells well. What big data analysis can do is to help the retailer do what is known as ‘sentiment analysis,’ where it can analyze the correlation as to why products A and D sell well and why product B doesn’t.
“Just doing the sentiment analysis can help the retailer fix the inventory management by providing the right stock, right sizes of that stock to the right store. If it could optimize its inventory for a given store, it would save huge storage cost, reduce the number of customers turning back from buying the right products and improve the overall service for this retailer.”
Kaleem claimed that without big data analysis, sentiment analysis is not doable because it is only with the former, which can read social media chatter, that the retailer can determine sales and stock decisions.
As for telecommunications, he said operators have begun using location-based big data analysis to improve value for advertisers and customers.
“Say subscribers visits Legoland [the theme park in the southern Malaysian state of Johor], and if advertisers know this through the location-based data that operators collect, it can offer discount vouchers to them in order that they benefit from them. This is the kind of value big data can have for telecommunications operators.”
“For financial services, big data can definitely help bankers to build up more accurate risk profiles by mining details of potential loaners mitigating operational and market risks,” he added.
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