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Management Report

Management reports, briefs and video-clips issued by Samsung Economic Research Institute

Big Data

Big Data

CHAE Seung-Byung

Feb. 25, 2011

Transcript

Welcome to our video program. I’m Seung-Byung Chae from the management strategy department.

Today every move you make is stored and recorded somewhere. What does this mean?

A record that you watched this video on your PC or smartphone will be stored in the log files of a server somewhere. When you swipe your credit card for lunch today, a record of that transaction will also be stored. Likewise, all the text, photos, and video clips that you share with your friends on Facebook and Twitter are stored on a server.

Then, how much data in total is stored in the digital space of the world? As of 2010, 1.2 billion TB, or 1200 trillion MB of data is online somewhere. It is now commonplace that anything from a dozen to a thousand TB of data can be stored at once. Let’s take Wallmart for example. Walmart saves more than 1 million transaction records per hour, and stores about 2,500 TB of information as of 2008. Such mountains of data, which cannot be handled with established analytical methods, are referred to as “big data.”

How does this affect business management?

Collecting, managing, and analyzing information is already one of today’s top business priorities. Data analysis is critical for businesses to grasp the needs and behavior of their customers and to develop successful strategies. Vast resources of valuable information can be found in big data from search engines and social media. Companies that access and analyze big data before others thus enjoy tremendous advantages.

Of course, analyzing big data remains a daunting, needle in a haystack task, and many are working hard to make it easier. Big data analysis was one of this year’s hottest topics in the IT sector. Major solutions providers like Oracle, Microsoft, HP, Cisco, IBM, SAP, and SAS are making all-out efforts to develop the core technologies needed to win in this area and dominate the market. What’s the payoff for them?

For one, big data allows access to patterns of information exchange over social networks. Let’s say there is a product. Consumers will as a rule trust reviews put up by other customers over advertisements by companies. In other words, consumers trust the information provided by experienced “prosumers” and members of their own community. Big data analysis can then help you figure out who or what is at the center of the buzz.

When you analyze interactions between consumers on social media, you can find potential consumer groups as well as the structures of the communities they belong to. Several analysis methods can make this happen. For example, statistical analysis can provide descriptive statistics that show activities and trends in social media, including changes in Twitter followers and the number of reviews on Facebook.

Network analysis can look into connections between people in social media, while using text analysis to determine people’s responses and their likes and dislikes. Social commerce companies are maximizing marketing efficiency by analyzing big data and focusing on “prosumers,” opinion leaders, and influential online communities.

Furthermore, companies can detect the symptoms, consequences, and processes of various incidents that they need to pay attention to by analyzing big data.

Just like animals detect earthquakes before they occur, companies can use big data to detect signs of approaching danger. Google for example introduced a system that detects the onset of a flu season even before health care authorities count the number of patients. The system utilizes the fact that people search for information online when they feel the symptoms of flu.

Companies can also embed detection and transmission functions in their product. Volvo has adopted a system where sensors connected to multiple electronic control systems collect information and automatically transmit it to headquarters. As a result, the automaker has become able to find defects after selling as few as a thousand cars, saving it the massive cost of discovering defects after selling hundreds of thousands of them.

When there is a sign of changing market trends, subtle indications start to appear before the trend comes to the fore. Big data allows you to read the minds of your customers by constantly checking real time search rankings, related search words, search statistics, messages on social media, and product use trends.

Lastly, big data can lead you to the best plan to implement your strategy. Systematic collection and analysis of big data helps reduce the amount of time it takes to evaluate what is going on and to assess various factors that affect management performance. By doing so, several scenarios can be drawn up and the best one can be chosen after looking into each scenario’s pros and cons. If there is a problem, fast response is possible.

For example, in Japan, a market where Twitter is gaining in popularity, many companies are using SNS to evaluate marketing effects in real time and provide improvements based on their results. Where it once took days or weeks to get final results from marketing polls, as well as lots of manpower and cost, companies can now understand customer response in real time, allowing them to update their ad campaigns daily if they need to.

According to NEC Biglobe, 40% of companies that uses customer analytics services on Twitter for their businesses are satisfied with the results, and 80% of them plan to continue to use SNS going forward.

Big data holds massive potential and allows companies to better understand their environment and to initiate effective strategies. Companies like Microsoft and InfoChimps have already seen the value of big data and are pursuing the online data and analytics marketplace with gusto.

What matters for your company is that you understand the value of big data and keep investing in this area. The first step will be to systematically collect big data in and out of your company. The next step is to assemble an analytics team of talented individuals with both mathematical skills and management insight. As the tidal wave of big data grows, only companies that make continuous efforts to develop their skills will find the opportunity for ongoing success.

Thank you for watching. I’m Seung-Byung Chae.

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