It seems like the premise of a new science fiction film, but a recent article in Wired explored a government project in which the National Security Agency is attempting to build the “the most powerful computer the world has ever known.” The agency wants to gather and analyze data ranging from cell phone calls to shopping receipts that are zigzagging across many of the world’s networks. This project is an extreme example of how better analytical capabilities are in high demand by governments and businesses alike.
The stats are overwhelming:
- In 2011, mobile data traffic was eight times the size of the entire Internet in 20001
- Wal-Mart alone handles more than 1 million customer transactions every hour2
Who has the ability to analyze and interpret such huge—and growing—amounts of information? An IBM/MIT Sloan survey of 3,000 business executives found that 60% felt they currently had access to more data than could effectively be used.3 However, a few companies are starting to bridge the data gap
IBM is one of the biggest players to claim a stake in data analytics with strategic decision making capabilities. The company introduced its analytic brainchild, which it dubbed “Watson” (in honor of the company’s founder, Thomas Watson Sr.), in a human versus machine showdown in 2011 on the television program Jeopardy. More recently, Watson made headlines as IBM said it expects the technology to help generate $2.65 billion in revenue annually by 2015.4
Oracle provides data storage and data mining capabilities that help companies create and apply predictive models that improve customer targeting.
TIBCO is connecting disparate sources of data to help companies better understand consumer buying habits and know where consumers are located. This helps improve real-time marketing campaigns. For example, let’s say you walk into a department store and see a pair of jeans that looks good and fits perfectly but is just a little over your budget. You hesitate. Just then your cell phone rings and it’s a coupon for 30% off if you buy the jeans within the next 30 minutes. Do you buy the jeans?
As our world becomes more interconnected, and people in developing and emerging markets begin to have access to the Internet, data is being mobilized and captured in many different forms. For retailers and service providers, the ability to process big data means strong profit potential. A report by McKinsey found that the use of data analytic technology may increase operating margins by 60%.
With the influx of big data, companies such as IBM, Oracle and TIBCO are creating a new tipping point. The ability to synthesize real time information will allow companies to strategically react to data and respond in real time with extremely personalized responses—and science fiction screenwriters will have to find new worlds to explore.
1 Cisco, “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011–2016.”, February, 2012.
2 Source: McKinsey&Company, “The Insight Factory”, May, 2011.
3 IBM/MIT Sloan, “Analytics: The New Path to Value”, October, 2010.
4 Bloomberg, March 6, 2012.
5 McKinsey and Company “Big Data: The Next Frontier for Innovation”, May, 2011
The mention of specific companies does not constitute a recommendation on behalf of OppenheimerFunds, Inc.