Every day, a humongous amount of data is generated from a wide variety of sources.
Businesses are being inundated with data collected from various interactions they have with customers and prospects.
The term ‘big data’ is used to describe a huge volume of data that is growing with time. This data is complex and not easily manageable by the traditional data management tools.
Big data is not a new fad. It dates back to the 1950s but only gained importance in the early 2000s when Doug Laney, an industry analyst, brought out the mainstream definition of big data to incorporate the main three Vs.
- Volume – A huge amount of data is collected through business transactions, customer data collected over various devices, and social media. Companies have access to this huge amount of data.
- Velocity – Data has a shelf life beyond which it becomes redundant. Businesses should be prepared to make the best possible use of this data at the right time.
- Variety – Data can be structured, unstructured and semi-structured. Making sense of all the variety of data can be a huge challenge for businesses if they are unprepared or don’t have the expertise.
Organizational decision-making and strategic planning can be better achieved when big data forms an important part of business analytics.
Before we delve into the details of big data and understand how big data and business analytics are important for business growth, let’s first understand why it is important for every business.
Why Is Big Data Important for Businesses?
Most businesses don’t have any idea what they should do with this data, but if they put it to good use, it has many benefits. When big data is used in business analytics, many business-related tasks are accomplished, like:
- Reductions in costs
- Savings of time
- Products and services are better aligned towards the customers’ needs
- Better analysis and understanding of any process failures, issues and defects
Big data analytics is being used in a variety of businesses that are competitive and have a fast response time to opportunities and challenges. This data can be used in almost any industry, including life sciences, banking, health care and manufacturing.
When organizations use data in a methodical manner, using statistical analysis, then it implies that they are making use of business analytics. It enables companies to make data-driven decisions.
Automating and optimizing business processes to gain a competitive advantage forms an important part of business analytics.
How successful business analytics is depends a lot on the quality of data, the skill of the analysts and the organization’s willingness to make decisions based upon data analysis.
Business analytics can be broken down into two parts:
- Business intelligence, which analyses the past data to determine how the performance has been.
- Statistical analysis, which involves doing predictive analysis to past data. This helps in predicting how a product, service or any other business parameter will perform in the future.
5 Reasons to Performing Business Analytics with Big Data
When it comes to big data analytics, many organizations are unable to make full use of the vast pool of data that they gather. Let’s take a look at some of the most important reasons for an organization to incorporate big data into its business analytics.
It solves business problems
Exploring large volumes of data with advanced analytics tools is just a waste of time and resources if you can’t put it to use. Instead, identify all the areas of your business, ongoing projects and processes where big data can be helpful.
For example, business transactions give you structured data when your customers use loyalty programs and payment cards. These produce timely streams of customer details like spending habits, affinity to certain products, time of purchasing, amount and mode of payment. Identify where this information can be utilized in your business.
It helps in decision-making
Decision-making can be tough when there are many divergent views on an issue. Backing up decisions with data helps provide balance in such situations.
In fact, a data-backed decision is likely to succeed as it is free from biases and personal factors that can influence the decision-makers.
It leads to better hiring choices and effective training, which increases employee productivity
Employees are the real assets of any organization. It’s very important to attract and recruit the right person for the right goal. All companies face talent shortages and skill gaps in employees at some stage. Industries like technology and healthcare have more requirement for highly skilled employees. Hiring managers who use big data gathered during the hiring process to select the right candidate see better employee potential and productivity. Such candidates are generally better equipped for their roles.
It gives you a competitive advantage
With so much importance being placed on gathering data at various consumer touchpoints, organizations are literally sitting on goldmines of data. Companies that can make sense of this data and use it to their advantage are the ones who will benefit the most.
A survey of more than 400 businesses done by Bain & Company found that organizations that use big data in their functioning were much ahead of their industry peers. They outperformed their competition financially and were more agile in grabbing business opportunities that came their way.
It increases revenue gains or profit margins
The ultimate goal of businesses is to increase their profit margins. Big data is a huge facilitator in making the right decisions, being proactive to new opportunities, and improving the existing processes, all of which result in increased revenue gains for the companies. Key business performance metrics can have significant improvements even with small adoption of big data in the business functions.
Big data is one of the most important technological trends. If used effectively in business analytics, it can help organizations to reap huge rewards.
When used in the organizational context, big data involves storage, management and utilization of a large volume of both structured and unstructured data at the right time to derive business insights. That’s why it is important for organizations to perform business analytics with big data.