Most of us tend to dismiss ‘Big Data’ as a jargon that belongs to the realm of technology. which has little to do with us. But today, that is far from the truth.
Take agriculture, for instance. There is a vast amount of data available on the soil type, climate and the altitude of every square metre of farmland. If this data is fed real-time into tractors as they are used in planting, the amount of seeds used, the depth at which they are planted and so on can change according to the data input.
By doing this, agricultural productivity can be increased easily without additional inputs of water, land or fertiliser. Sounds futuristic? Not really! Paul Maritz, executive chairman of the board at Pivotal, a company at the forefront of the Big Data revolution, explained that companies are already using data in this and other equally innovative applications.
What is it?
The term Big Data denotes the enormous amount of data generated by men and machines that can be used to improve the way things are currently being done. Apart from the example of data on farm land, other typical examples are the data available to telecom companies as a customers make calls, the data that is captured at point-of-sale terminals in retail companies or the data generated through the trading session on the stock exchanges.
We are talking about an insane amount of data here and the challenge lies in not just capturing it, but also in storing and analysing this information. That is not all. Companies, unsatisfied with the rear-view approach, analyse data real-time, so that they can respond instantaneously.
Why is it important?
As companies start tapping into the potential that this concept offers, those unwilling to follow suit or do not make the required investment, would find it difficult to survive. Walmart, the US retailer, has heavily invested in software that can track consumer behaviour in real-time from the bar codes read at Walmart’s sales counters. This data helped the store exert pressure on manufacturers of the relevant products to improve their productivity. This has been one of the key to Walmart’s success.
The first movers in this field were the consumer-oriented and financial services companies. But as other companies start using data to improve their business opportunities, it could substantially improve their earnings.
Why should I care?
As an investor, understanding the difference Big Data makes to companies’ performance, can help you decide on the stocks to bet on and those to avoid. As a consumer, you probably prefer firms that are willing to invest in this kind of technology to improve the consumer experience.
For instance, how would it be when your bank decides to award you a premium credit card for being their most privileged customer? Or if your telecommunication company keeps track of the calls you make and decides to reward you with additional talk time or data downloads as a bonus? Wouldn’t you prefer restaurants where they remember your seating, eating and drink preferences?
The bottomline
Go in for companies that are big on data. They're the ones who will stay ahead of the game.