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5 Benefits of Big Data

Published 2020-07-10 09:46:35

 

In 2005 Roger Mougalas coined the phrase ‘Big Data’ to describe the vast and diverse sets of information that exponentially grows over time. And while tech pundits initially decried the term as just another marketing buzzword, Big Data has since been adopted in operations across several industries spanning from healthcare to finance.

In its true essence, Big Data is a phenomenon that dates back centuries as far back as ancient Egypt and the Roman Empire. The Library of Alexandria is a prime example of how the concepts of Big Data were in practice as the library was home to over half a million documents and scrolls before it was destroyed.

Fast forward into the 21st century and Big Data has evolved into a juggernaut that holds greater value than oil. According to market intelligence company IDC, the ‘Global Datasphere’ in 2018 reached 18 zettabytes. Currently the number is estimated to be around 44 zettabytes in 2020. To put this astronomical figure into perspective, it means that there are 40 times more bytes than there are stars in the observable universe. Scientists estimate that there are 100 billion stars within our observable galaxy.

Considering that there are 300 million new social media users each year (500 users per minute), 300 hours of YouTube content uploaded every hour, 100 million messages sent every minute, and 2314 exabytes of healthcare data created every year, it is easy to see why Big Data has taken on a life of its own.

Big Data is scientifically defined as being a combination of structured, semi structured and unstructured data collected by organisations that can be mined for information and used in machine learning, predictive modelling, and other advanced analytics applications.[1]It is often characterised by the ‘3V’s’: volume, variety, and velocity.

Data volume refers to the amount of data that is available to an organisation, which does not necessarily have to own all of it as long as it can access it. Data variety is a measure of the richness of the data representation–text, images video, audio, etc. Data velocity measures the speed of data creation, streaming, and aggregation.[2]

It is evident from the statistics above and its definition that Big Data is beyond human comprehension. Mix in the advent of the Internet of Things (IoT) and the ever-growing connectedness of devices and we start to understand why algorithmic tools and systems that process large data sets hold great value for organisational success in the digital economy. 

 

1.     Cost Reduction

Integrating Big Data technologies in business operations can bring cost advantages across many functional departments. For starters there is marketing. Most businesses rely on understanding their target audiences by using customer profiles that break down their potential client’s consumption habits. This form of market research is time intensive and can even require an organisation to outsource services to specialists who specialise in customer behaviour, purchasing behaviour etc. The average consumer today is more complex than ever before. They are educated, have varying interests and are global citizens that represent diverse cultures. This makes analysing consumers very difficult, but with Big Data, firms can evaluate customer behaviour in real-time and make strategic decisions.

One effective example of how Big Data is used for marketing is through Google Ads and Facebook that display personalised advertisements tailored to individual interests.

Cyber security is a practice that can also benefit from Big Data analytics. The ‘Global Application and Network Security Report’ published by Radware found that the average cost of a cyberattack amounted to $1.1 million (R18,8 million). Cyberattacks have detrimental effects on businesses as they can damage reputation, customer trust, and ultimately profits. Integrating Big Data analytics for cybersecurity can aid organisations by proactively analysing network traffic for suspicious behaviour.

2.     Increased Customer Satisfaction

Big Data can play a major role in improving the customer experience of the 21-century consumer. A massive competitive advantage for any business is being able to provide value for your customers with every product offering. As mentioned above, companies can use Big Data to refine and create personalised marketing campaigns based on specific customer preferences.

Moreover, Big Data can aid in supplementing effective customer service. A research study from NewVoiceMedia revealed that U.S firms lost an estimated $75 billion to poor customer service in 2018. With Big Data integration, businesses can monitor customer service and predict customer behaviour.

3.     New Product Development

The data generated by a single cell phone is enough to gather enough insight for product innovation. Combine that with an additional 4.57 billion active internet users and you have a melting pot of rich information waiting to be mined. Understanding customer trends is crucial to new product development but it is difficult for companies to constantly ‘be in the loop’ at all times without incurring massive costs and sacrificing time. With Big Data analytics, companies can analyse trends efficiently to generate new products and services that customers are willing to pay for repeatedly.

The product development cycle consists of an interconnected web of cross-functional activities that include various departments such as marketing teams, data scientists, developers, engineers etc. Big data analytics can mine information from across the firm as well as external databases simultaneously to filter data that is useful to feasible idea screening and concept testing.

An example of this is Netflix. Netflix currently sits at an estimated 182 million paying streaming subscribers worldwide. A large reason for why they dominate such a large market share is due to their ability to deliver relevant and fresh content specific to certain demographics. According to Netflix, over 75% of viewer activity is based off personalised recommendations. Big Data plays a huge role in Netflix’s success as the company uses it to analyse watch data that tells them what customers are currently interested in. As a result, they can develop new content pieces that keep customers engaged.

4.     Increased Efficiency and Productivity

It goes without saying that the primary benefit of integrating Big Data in business is efficiency. Big Data fosters informed decision-making from a strategic level that helps guide decision-making at a tactical and operational level. By integrating Big Data, companies can effectively coordinate and manage their resources.

Some logistics companies have implemented Big Data with their operations to optimise delivery systems, reduce fuel costs, and reduce wear and tear.  One such example is UPS. UPS uses a Big Data system called ORION (On-road Integrated Optimization and Navigation) to manage its fleet system. The system creates optimal routes for delivery drivers from the data supplied by customers, drivers and the vehicles and can alter the routes on the fly based on changing weather conditions or accidents.

UPS states that since the adoption of this technology, they reduced fuel consumption by 10 million gallons, reduced carbon dioxide emissions by 20,000 tonnes, deliver 350,000 more packages yearly, and reduced the distance travelled by fleets by 46 million kilometres.

5.    Enhanced Reputation

Reputation is an intangible asset that does not show up on the balance sheet but is arguably just as important as goodwill, patents, and trademarks. Customer Relationship Management (CRM) is a common tool that businesses use to manage and enhance their reputations.

Using Big Data helps companies to gather feedback on customer perceptions that drive purchase decisions. Ultimately, understanding customer perceptions enables a company to engage with customers more effectively. Sentiment analysis is a Big Data tool that extracts subjective information to help companies identify, interpret, and classify customer sentiment towards products, brands or services in online conversations and feedback.

Another great tool that many organisations have started utilising are chatbots. Essentially, chatbots improve reputation by enhancing customer experience. Bots are predominantly powered by artificial intelligence (AI) to meet customer expectations for self-service. The true value of chatbots however lies in their ability to process large amounts of data faster than humans. The data collected from these systems enables management teams to not only tailor more specific responses to frequently asked questions, but develop key insights into what potential customers are interested in.

E-commerce sites frequently use the information provided by chatbots to redirect their website marketing strategies. Common ways in which this is done is through displaying products that are relevant on their homepages and increasing provisional stock of sought-after items based on queries.

Thus far, the integration of Big Data in business practices has proven to wield sustainable ROI (Return on Investment) for many organisations across the globe. Whether it is used to improve internal processes, inform new product development, or increase customer satisfaction, Big Data is here to stay. As the world becomes more connected, Big Data analytics is increasingly becoming an important tool that modern day companies need to not only compete but create sustainable value.

Read more about Knowledge Center, a big data solution designed to help healthcare professionals and organisations deliver quality patient care.



 

1. Favaretto, Maddalena, et al. “What Is Your Definition of Big Data? Researchers’ Understanding of the Phenomenon of the Decade.” PLOS ONE, vol. 15, no. 2, 25 Feb. 2020, p. e0228987, 10.1371/journal.pone.0228987. Accessed 07 June. 2020.

2. Kitchin, Rob, and Gavin McArdle. “What Makes Big Data, Big Data? Exploring the Ontological Characteristics of 26 Datasets.” Big Data & Society, vol. 3, no. 1, 5 Jan. 2016, p. 205395171663113, 10.1177/2053951716631130. Accessed 07 June. 2020.

 

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