When big data can lead to big profit

Businesses gear up to the need for deep analysis

It is hard to collect, analyze, store, search and visualize big data, but it is what everyone is talking about and something that companies and governments are finding is worth its weight in gold.

But what makes it a billion dollar business is its ability to sift the wheat from the chaff and provide the cutting-edge information vital for companies and governments to power ahead, analysts say.

Big data will be a key factor in competition and the growth of individual firms, says global consultancy major McKinsey & Co in a recent report, adding that it will be particularly relevant in areas such as productivity growth, innovation and consumer surplus, when someone is willing to pay more for a product than the market price.

Nowhere is big data more important than in China, the world's fastest-growing economy. With its huge population of more than 1.35 billion, rapidly expanding economy and increasing amount of Internet penetration, it is fast becoming a market that no company worth its salt can ignore. Chinese and overseas companies are now finding that having access to real-time insights with big data is more than handy for understanding fast-changing customer trends, says Miao Kaixiang, chief technology officer of the data center software division of Intel Corp. Big data is also a handy tool for governments because it helps to attract fresh investment and create more local jobs, says Miao.

In layman's, terms big data refers to the technologies used to collect, process, store, share and analyze huge volumes of data such as text, documents, videos and pictures.

Big data, however, differs from data mining and data-warehousing. While data mining is the process of discovering interesting patterns from previous data stored, it can handle only limited amounts and usually focuses on abnormal data or errors.

Data warehousing on the other hand refers to simple data storage and is more of a central repository of information from multiple sources. Data warehouses store current and historical data for further analysis through big data technology or data mining.

According to Miao, not too many people realize they are part of the big data generation process. Citing the example of a person searching online for a new smartphone, analysts say individual preferences and requirements are tracked by search engines and used for targeted advertising. Enterprises can also extrapolate big data to gain meaningful insights and chart successful market strategies.

Early birds

Although big data is still in its infancy in China, there are several early birds that have reaped the advantages. These include State-owned companies and some international firms, says Miao.

Nuclear power operator China Guangdong Nuclear Power Group (CNG) is one of the Chinese companies that has gained from the application of big data.

Li Chenglian, deputy director of CGN says that the clean energy maker had a problem on its hands when it found that it was facing a serious data overhang issue. "There were more than 20 subsidiaries of the group using various software and generating immense volumes of business data every year," he says.

"Most of these data were loose and unconnected and could not offer a unified view of the business to the top brass during the decision-making process."

Li says the whole process was nerve-wracking, time-consuming and expensive. But the company overcame that obstacle by using Microsoft SQL Server Master Data Services. "With this technology, we found that the group could easily share information with subsidiaries, which also improves employee efficiency and competitiveness."

Li says it also helped the group to have a centralized data warehouse, where with a push of a button, employees can access and analyze terabytes of data and generate customized reports within minutes.

US-based budget hotel operator Super 8 Worldwide is another company that is using Microsoft SQL Server 2012 to gain an advantage in China. "We can now better determine our long-term development strategy in China," says Joe Xu, senior vice-president of distribution at Super 8 Hotels (China) Co Ltd.

Xu says that with the budget hotel market in China growing rapidly, it was important for Super 8 to grow at the right pace and in the right locations and be ahead of the competition. "Big data has played a key role in our success," he says.

A recent survey conducted by global networking major Cisco Systems Inc among Chinese and overseas companies showed that more than 60 percent of the respondents believed big data is essential for businesses to improve decision-making. More than 90 percent of the respondents from China expressed their confidence in using big data.

Global market research firm International Data Corp estimates the amount of digital data, mostly in the form of unstructured data, will grow by 40 percent to 50 percent every year. According to the organization, by 2020, that total will reach 40 zettabytes (one zettabyte is a billion terabytes).

The Asia-Pacific (excluding Japan) big data technology and services market is expected to grow from $258.5 million in 2011 to $1.76 billion in 2016, on the back of a 46.8 percent five-year compound annual growth rate, data from IDC show.

Technology and market research company Forrester Research says that business intelligence estimates that big data projects will grow at 20 percent or more in the Asia-Pacific region over the next 24 to 36 months.

Real potential

Big data adoption plans by Chinese companies are fast gaining momentum, Forrester says, adding that the adoption rate is 21 percent, compared with 20 percent for Singapore and Indonesia and 19 percent for Malaysia. The same study estimates that big data business in China could touch 5 billion yuan ($806 million) by 2016.

The Internet industry holds most potential for big data companies, sources say.

By the end of 2012, China had 564 million netizens, 420 million of whom used mobile devices such as smartphones and tablet computers. Statistics provided by global technology firm Intel Corp shows that Taobao Marketplace, the biggest e-commerce platform in China, generates roughly 50 terabytes of data every day, while Baidu.com, the Chinese search engine, accounts for more than 6 billion searches and 1 exabyte of data daily. An exabyte is 10 to the power of 18 bytes.

Big data applications are also used in other industries such as finance, telecoms and even hospitals, where patient data can be stored and analyzed to hedge against possible risks and diseases.

China Mobile Ltd, a leading Chinese telecom operator, has already made a strong start in big data applications by using Intel devices and solutions to locate call histories. The telecoms operator says it can now trace any specific call history within 40 seconds and at sharply reduced costs.

Financial institutions bank on big data to expand their business and know more about potential clients.

Josephine Kwan, an asset management expert and partner at PricewaterhouseCoopers, a multinational professional services firm, in Hong Kong, says big data can help asset managers to communicate more with their investors.

"Via big data, asset managers can collect accurate and timely data for further information about their investors and make tailored investment plans," Kwan says.

"CEOs will need to maintain or increase investment in technology and data management to maximize distribution opportunities or to benefit from new opportunities offered by social networks," she says.

Prakash Sundaresan, chief technology officer of Microsoft Asia-Pacific Research and Development Group, says the potential for insights from data to affect the decisions companies make can be profound and widespread.

"Some industry observers predict a 20 percent growth in revenue and earnings for companies that use big data compared with those who don't," he says.

"Big data is not just about buying databases and software. It is also about how to use it commercially to grow the business," says Phillip Beniac, regional vice-president of QlikView, a Pennsylvania company that provides big data services.

QlikView has about 27,000 customers worldwide, including King.com, the developer of Candy Crush, the popular smartphone game. King.com has more than 40 million players and more than 3 billion games played every month globally.

Beniac says that by using QlikView solutions and the Apache Hadoop-based big data system, King has been able to develop rapid insight into customer behavior. Apache Hadoop is an open-source software framework used for storage and major processing of hardware data and is one of the most preferred big data applications.

"We use QlikView for explorative purposes when the data extraction and the transformations are designed and verified from the big data," says Mats-Olov Eriksson, director of data warehousing at King.com.

"The rise of Big Data has led businesses to believe that they need 'data scientists' to leverage this new raw material immediately," says Terry Smagh, vice-president, sales, for Southeast and North Asia at QlikView.

Big data should be understood as an emerging trend that encourages business users across an organization to analyze and make discoveries in the data through intuitive and exploratory technology, he says.

Data discovery helps all employees to make a more informed decision easily - employees, even without special skills, can spot anomalies and hidden relationships that have never been seen before, such as understanding user behavior more thoroughly, discovering new business models and improving competitive edges, Smagh says.

"The power of data discovery lies in its ability to liberate data via visualization as much as build a compelling story for business users," Beniac from QlikView says.

Head start

The US has a head start in data development. In March 2012, the Obama administration announced it was investing $200 million in big data projects to advance scientific research in areas such as healthcare, energy and the environment. In China, however, the concept is still in the early stages.

"While some leading-edge customers in China are using big data in production, most of the others are still in the trial stages. However, there is a huge interest in this technology and I expect rapid adoption in the coming years," says Sundaresan from Microsoft.

He says that although the big data theme is similar regardless of geography, there are some areas or aspects where China is different.

"One is the sheer scale of China in almost every market category, whether this be the number of Internet users, mobile minutes online, number of internet-capable devices, etc," he says.

"Most of the Chinese companies are not bound by legacy products or implementations because they are just beginning to explore this area and thus have more flexibility to implement futuristic systems."

But big data is an opportunity and challenge for Chinese customers, he says.

Internet companies will definitely be the first to adopt the technology, while others are still evaluating the various scenarios. Sundaresan says that several big data scenarios are developing in specific industries, such as the "Internet of Vehicles" in the auto industry, regional solutions in the healthcare industry, and online-to-offline in the retail industry.

He adds that, although the technology is evolving rapidly, the key constraint is the lack of adequately trained talent. Data scientists are a relatively new talent pool facing a severe shortage.

Lei Jun, founder and CEO of Xiaomi, a popular smartphone manufacturer from China, is one of those concerned over privacy protection in the big data era. He wants Chinese policymakers to speed up legislation on information security.

Lei says China should put in place a sound mechanism to harness big data talent and funding for key research in the area. At the same time, it is also important for the various government arms to fully share their data so that social institutions can research it for better efficiency.

Contact the writers at linjingcd@chinadaily.com.cn and chenyingqun@chinadaily.com.cn.