Big Data in Business

How is big data impacting business and people?

Have you ever searched for or bought a product on Amazon?

Did you notice that Amazon started making recommendations

related to the product you searched for

Recommendation engines are a common application of big data.

Companies like Amazon, Netflix and Spotify

use algorithms based on big data

to make specific recommendations

based on customer preferences and historical behavior.

Personal assistants like Siri on Apple devices

use big data to devise answers

to the infinite number of questions end users may ask.

Google now makes recommendations

based on the big data on a user's device.

Now that we have an idea

of how consumers are using big data,

let's take a look at how big data is impacting business.

In 2011, McKinsey & Company said that big data

was going to become the key basis of competition

supporting new waves of productivity growth and innovation.

In 2013, UPS announced that it was using data

from customers, drivers and vehicles

in a new route guidance system

aimed to save time, money and fuel.

Initiatives like this one support the statement

that big data will fundamentally change

the way businesses compete and operate.

How does a firm gain a competitive advantage?

Have you ever heard of the Netflix show

called House of Cards?

The first season of the show was released in 2013

and it was an immediate hit.

At the time, the New York Times reported that

Netflix executives knew that House of Cards

would be a hit before they even filmed it,

but how do they know that?

Big data.

Netflix has a lot of data.

Netflix knows the time of day when movies are watched.

It logs when users pause, rewind and fast forward.

It has ratings from millions of users

as well as the information on searches they make.

By looking at all these big data,

Netflix knew many of its users

had streamed the work of David Fincher

and films featuring Kevin Spacey had always done well.

And it knew that the British version of House of Cards

had also done well.

It also knew that people who liked Fincher

also liked Spacey.

All these information suggested

that buying the series would be a good bet for the company,

and in fact it was.

In other words, thanks to big data,

Netflix knows what people want before they do.

Now let's review another example.

Market saturation and selective customers

will require Chinese e-commerce companies

to make better use of big data

in order to gain market share.

Companies will have to persuade customers

to shop more frequently, to make larger purchases

and to buy from a broader array

of online shopping categories.

E-commerce players already have the tools to do this

as digital shopping grows.

Leading players are already using data

to build models aimed at boosting retention rates

and spending per customer based on e-commerce data.

They have also started to adopt analytics backed pricing

and promotional activities.

The Internet of Things refers to the exponential rise

of connected devices.

IoT suggests that many different types

of data today products will be connected to a network

or to the internet for example refrigerators,

coffee machines or pillows.

Another connection of IoT is called wearables

and it refers to items of clothing

or things we wear that are now connected.

These items include Fitbits, Apple Watches

or the new Nike running shoes that tie their own shoelaces.

You have seen some of the characteristics of big data

and you have seen some of the applications.