As the amount of data continues to grow exponentially, compounded by the internet, social media, cloud computing and mobile devices, it poses both a challenge and an opportunity for organisations – how to manage, analyse and make use of the ever-increasing amount of data being generated.
In an economic study on ‘big data’ by the Centre for Economics and Business Research (Cebr), sponsored by business analytics company SAS UK, we investigated how UK organisations, both public and private, can unlock the economic value of big data through the adoption of analytics.
The results show that ‘Data Equity’ – the economic value of data – has the potential be worth £216bn to the UK economy over the next five years – equivalent to more than the current defence, NHS and education and budgets combined.
The benefits of data equity are expected to manifest themselves in the creation of new jobs – Cebr predict that 58,000 could be created as a result of the entry to markets of new businesses, through which the business creation benefits are derived.
Business creation benefits and could raise employment as the result of new business start-ups and increased demand for data-specific roles. Improvements in market and customer intelligence in every sector will support entrepreneurial activity, allowing for more precise strategising and reduced uncertainty, therefore attracting new business start-ups into these markets.
The main efficiency gain is contributed through improvements to customer intelligence. Data-driven improvements in targeted customer marketing, the more effective meeting of demand and the analytical evaluation of customer behaviour is forecast to produce £74 billion in benefits over the next five years – the majority being driven by UK manufacturing (£45bn) and retail (£32bn).
We expect the manufacturing sector to see the largest innovation gain from the adoption of big data analytics. The utilisation of high-performance analytics could lead to new product development benefits of £8 billion in increased output over the next five years. The retail sector can also experience significant gains through innovation such as new consumer products which are expected to induce a £3 billion rise in output.
There is also much value to be unlocked from supply chain and logistical data. Cebr anticipates £46 billion in gains through using predictive analytics to better forecast demand, replenishment points and optimise stock and resource allocation to reduce costs.
The public sector is another key gainer. Government could save £2 billion in fraud detection and generation £4 billion through better performance management. A further £6 billion in efficiencies could be gained by analysing performance data, with the healthcare system benefiting by £2 billion.
This enhanced information, and ability to react dynamically to changes in the market landscape, will enable smaller businesses to compete more effectively with larger and more established ones, having reduced barriers to entry. Small retailers and manufacturers are anticipated to take significant advantage of this big data opportunity, generating £15 billion of new business.
Job creation is a key aspect of the report and experts agree that data equity has the potential to be as important to organisations as brand equity. As a result there is an increasing demand for ‘data scientists’ – highly skilled statisticians who work with data to derive business insights. We are already seeing the emergence of the Chief Data Officer in the US as organisations look to capitalise on their data equity for a competitive advantage, and it won’t be long until that trend crosses the pond.
But currently demand for data scientists outstrips supply, with the UK facing a particularly acute skills gap when it comes to science, technology, engineering and mathematics (STEM) subjects. This emphasises the need to teach high quality STEM skills at school and university to prepare the next generation of graduates for the big wide world of data.
As the volume of data created exponentially increases and big data’s value is unlocked to greater effect by technological advances, we would expect data to start appearing on the balance sheets of companies that begin to realise its value in financial terms. Furthermore, the efficiency and innovation gains generated from data-driven technologies can play a vital role in ensuring the competitiveness of the UK’s goods and services on the global stage, and thus generate a wider economic benefit beyond the value of the significant asset to its owner.
Tapping into the dizzying amount of big data could be the stimulus the UK economy has been searching for. High performance analytics has the power unlike any other technology to generate growth, reduce debt, create jobs, develop new innovations and deliver greater operational efficiencies. Organisations, large or small, government or commercial, must get to grips with the big data challenge, and use analytics to identify tomorrow’s opportunities.