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Data Mining

The three biggest big data myths

Here are three myths that CEOs caught up in the Big Data hype should be aware of:

 

1.     Big Data itself is inherently valuable

 

The biggest Big Data myth is that the data in itself is valuable. Vendors will tell you that by increasing the variety and volume of data, businesses can dramatically enhance the quality of insight and the accuracy of decision-making. And this is true – provided organisations know what to do with the data. Big Data doesn’t provide solutions; it simply creates more options. The problem is, most businesses already have more options than they know what to do with.

 

2.     Big Data allows you to reduce complexity

 

Big Data offers a different view into the business – new insights into decision-making and problem-solving that were previously inaccessible. But data is simply a starting point. What most companies don’t realise is that they don’t actually have a data problem at all; they have a calculation problem. And many business leaders are simply unaware of the enormous interconnected web of options that feed and impact every event. What starts with a colossal number of options becomes infinite as the business environment changes.

Consider a small logistics company. It has six trucks and 43 depots to which it must deliver stock daily. The CIO knows that he can make the company more profitable by finding the most efficient way to get from A to B. But how many options are there for moving stock from one place to another? How many different routes are available? For a relatively small firm with six trucks, the number of possible permutations is equivalent to the number of atoms on earth. 

In every type of business – from transport to manufacturing, retail to healthcare – the route to efficiency is blocked by complexity. The sheer volume of calculations required to operate in a continuously changing environment means that most companies aren’t just overwhelmed with data; they are also overwhelmed with options. Only through the ability to calculate and automate in real time can companies use Big Data to tackle complexity.

 

3.     Big Data helps refine your decision-making

 

Mike Tyson was once asked why he appeared to deviate from his game plan during a fight. Tyson’s response was reflective of a man with broad experience in a fluctuating environment: “Everyone has a plan until they’re punched in the face.”

Plans have a short shelf-life. They change according to circumstances. All organisations need a plan to execute against, but the quality of that plan diminishes with every passing second. 

Consider the chaotic environment of an airport over the Christmas period, possibly the worst time for any airport operator. All over Europe, flight schedules are packed. In Frankfurt, which acts as a hub airport, there has been heavy snowfall and ground staff are working hard to clear it in time. Another day of snow on Christmas Eve means that it becomes too dangerous for some smaller planes to land. These planes are diverted to Paris Charles de Gaulle Airport, which is already running at full capacity. To keep operations running, the airport has to call on the services of extra air traffic controllers and ground staff.

Airlines and passengers expect the operator to keep everything under control and resolve any disruption immediately, no matter what the circumstance. So how does the airport cope with this additional, unplanned influx of planes? How does it scale its operations quickly, efficiently, and effectively?

The best solution is to use all the available data to create a plan that looks after the best interests of all the passengers, taking into account any safety and security regulations – then executing that plan.

With every change in the environment comes more options and more pressure to make the right decision. The number of options and the speed at which those options escalate is critical.  Organisations have to be confident that they are making accurate decisions backed by the latest information. Only then can they act with the speed and agility that the situation requires – and avoid potential disasters.

By enabling automatic checks to be performed in real time and based on Big Data, changes can be immediately incorporated into the planning process. As a result, planners get a consistent and real-time overview of the business, and are able to make fast, calculated decisions that lead to cost savings and more flexible customer service.

So, is it time for your CEO to embrace Big Data?

The question isn’t really about Big Data because it is, in itself, meaningless and simply a means to an end. The value comes from Big Calculations – how you make sense of reams and reams of data in real time.

Therefore, the starting point for CEOs has to be: What decisions do I need to make in order to improve my business?

Let’s return to our logistics company. How can a company like this optimise its delivery routes in a way that prioritises the best and most loyal customers? How do they make the right decisions on the fly that will enable fast responses to changing conditions?

It is only when a business understands the decisions it needs to make, that it is able to figure out the calculations it requires to choose the best responses. By using Big Data combined with software that helps you understand it, make automated decisions with it, and act on it, you’re ensuring that your company doesn’t get punched in the face.

 

Arjen Heeres, Chief Operating Officer at Quintiq

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