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DOI:10.1145/2602326

Charles K. Davis

Viewpoint
Beyond Data
and Analysis

Why business analytics and big data really


matter for modern business organizations.

PHOTOGRA PH BY VITA LIY NOVITSK Y

HEREVER BUSINESS EX-

turn these
days, someone expounds the merits of
business analytics, or
some derivative of business analytics
like supply chain analytics or marketing analytics or human resources analytics, or even predictive or Web or visual or data or streaming analytics, or
any number of others.5,8 The academic
community is also promoting this
emerging view of analytics.6 There has
recently been a call for a new professional role, that of the data scientist,
to implement and diffuse analytics
methodologies into and across organizations.3 There is even concern there
will not be enough of these new professionals to meet the growing demand
for this analytics specialty even in the
immediate future. So, what does all of
this really mean?
Today, businesses are awash in
data.10 In wave after disruptive wave
of technological and organizational
change, business leaders face a host of
powerful forces. For example, information processing has become increasingly more powerful and flexible, with
faster and higher-capacity storage and
networks. Simultaneously, globalization and other competitive factors have
exerted strong pressures to improve
efficiencies and effectiveness, and to
strengthen business and customer relationships. Each successive stage of
this competition requires more data
and more analysis to support strategic,
ECUTIVES

managerial, and operational decisionmaking. This competition, therefore,


is driving a quest for more and better
analytics technology; and this technology, in turn, helps to make competition
even more intense. This cycle results in
a confluence of competitive imperatives and technological advancements
that interact dramatically. More effective analytics enables a higher level of
competition; and higher competition
creates further imperatives to make
the analytics more effective. Advancing technology creates more competition, which creates more technology,

which creates more competition, and


so it goes.
Real Change or More of the Same?
Still, as a practical matter, it is not difficult to be skeptical about business
analytics.1,7 This is primarily because
what is being touted as new is a set
of well-established and already widely
used analytical approaches and methodologies which, aside from a few
refinements, are not new at alland
have historically on occasion been unreliable or impractical. These new analytics employ essentially the same mul-

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viewpoints

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What dependence
upon analytics implies
about the ways
businesses must
now compete is
what is truly profound.

tivariate inferential and descriptive


statistical methods and mathematical
modeling techniques that have long
been used by businesses for analyzing
data to support instances of complex
decision making. For example, correlations, cluster analysis, filtering, decision trees, Bayesian analysis, neural
network analysis, regression analysis,
textual analysis, and so forth are all in
the analytics arsenal, and none of this
is particularly new.2 Furthermore, even
with todays most modern techniques
and tools, this kind of analytics still
has practical limitations. For example,
software and data complexities can
impede effective analysis, and interpreting the results of complex analyses
accurately can be potentially perilously
misleading. It is, therefore, difficult
to appreciate this latest emphasis on
business analytics is anything unusual
or different in comparison to the analytical processes that have been routinely employed by a host of seriousminded business decision makers in
the past. One might well argue this
change appears to be essentially incremental and does not embody any fundamental paradigm shifts.
Another key aspect of business analytics is often called big data.9 This is
characterized by vast collections of
variously structured and even unstructured data that, when appropriately
rationalized, can provide understanding and insight into various issues that
reside embedded within that data.4
But this is also something that executives have been addressing for a long
time. Remember the term information overload that was so popular a
decade ago? The essential tools and
techniques for dealing with big data
include database management, espe-

viewpoints
cially data warehousing, data mining,
dashboards, and associated technologies. These are hardly new constructs
in the realm of managing data. Neither
are the concepts, for example, of data
ambiguity, data filtering, data context,
data interpretation, data conversion,
or data redundancy. Again, aside from
a few progressive data management refinements, it can hardly be argued that
any of this is particularly new either.
In theory, big data is different because of the three Vsvolume, velocity,
and variety.10 That is, big data consists
of expansive collections of data (large
volumes) that are updated quickly
and frequently (high velocity) and
that exhibit a huge range of different
formats and content (wide variety).
These factors force organizations to
pursue increasingly innovative and
cost-effective approaches to organizing, processing, and delivering timely
information. It is argued that big data
represents a real departure from the
past. Fair enough; still, this argument
is essentially evolutionary. Companies
have been experiencing incremental
expansions of volumes, velocities, and
varieties of data for decades, more
recently accelerated by the growth of
the Web. Except perhaps for its sheer
volume, this does not appear to be
anything particularly unusual or unexpected. Nonetheless, cumulative
change is only one aspect of this question. The real thrust here involves how
this accumulation interacts with and
impacts organizational strategies,
operations, and controls beyond the
technology.
Basic Drivers for Change
So, why is business analytics suddenly
drawing so much attention? One point
is becoming clear. This is not likely to
be just another buzzword that is hyped
for a while and then recedes from the
limelight quietly. Companies are really
concerned about this issue, and there
is traction for real change here. Why?
Businesses are experiencing everexpanding cycles of change caused by
the interaction of competitive forces
and the harnessing of analytics and big
data technologies as essential competitive weaponry. Technologies for collecting, manipulating, transmitting,
and analyzing data have been improving for a long time. What is new and dif-

ferent is that these technologies have


reached, and are surpassing, a capacity
threshold for processing and storing
data that is swamping conventional
levels of organizational ability to cope
with the volumes of data being generated. Business analytics technologies
enable organizations to better cope
with these new processing realities.
This is important because the cumulative reach and scope of the underlying
technologies and methods in use today
reflect a level of impact on organizations that makes large-scale analytics
critical for both sustaining business
competitiveness and enhancing dayto-day decision making. It is the reach
and scope of these technologies and
methods that actually matter here, not
whether the analytics and data tools
are newly invented or not. This revolution is real and it is permanent.
Why is this happening now? Beyond technological innovations that
make it possible to accumulate and
process massive amounts of data
ever more cost-effectively, the other
key concept here is a competitive
mandate that businesses continuously improve their decision-making
capabilities in order to survive.6 The
consistent, systematic analysis of
complex data for decision making
enables a company to operate more
intelligently at all levels. In particular,
the emphasis upon strategic business
analytics in recent years has elevated
executive expectations and helped to
transform the business analytics ideal
into a significant competitive force.
The application of business analytics
methods leads to improvement in an
organizations overall decision-making
capacity, which enhances its ability
to conduct its business intelligently.
So, the desire (and accelerating need)
to achieve a higher level of organizational intelligence is a prime driver for
implementing business analytics.
An Executive Perspective
These arguments resonate well, but
there may be a broader explanation
for this phenomenon. Since the advent
of computing (and networking) as a
profession, computing professionals
have shared a common visionthat
this technology over time is destined
to eventually become wholly integrated
into every operating and managerial

function in every part of every organization. Todays business analytics is a


manifestation of that vision. In a very
real sense, the usage threshold that
has been reached for computing technologies in modern organizations is
that of utter dependence upon timely
information for basic competitive viability. This business analytics ideal
implies a mandate for data collection
and manipulation on a grand scale
just to be able to compete in the modern global marketplace. This dependency has evolved from (and is driven
by) the relentless march of progress in
computing technologies, undoubtedly; but what dependence upon analytics implies about the ways businesses
must now compete is what is truly
profound. Business analytics and big
data are not just marketing hypeor
more of the same old statistical analysis and data manipulation methods
that have always been around. This is
the future. The concept of analytics, as
it is understood today, really is new. It
is a term that embodies the realization
of a historic vision of how computing
will challenge and change the world of
business, forever and irrevocably, a vision that is now coming to pass under
the guise of business analytics.
References
1. Barton, D. and Court, D. Making advanced analytics
work for you. Harvard Business Review 90, 10 (Oct.
2012), 7883.
2. Davenport, T.H. and Harris, J.G. The prediction lovers
handbook. MIT Sloan Management Review 50, 2 (Feb.
2009), 3235.
3. Davenport, T.H. and Patil, D.J. Data scientist: The
sexiest job of the 21st century. Harvard Business
Review 90, 10 (Oct. 2012), 7076.
4. Davenport, T.H., Barth, P., and Bean, R. How big data is
different. MIT Sloan Management Review 54, 1, 4346.
5. Hopkins, M.S., Lavalle, S., and Balboni, F. 10 insights: A
first look at the new intelligent enterprise survey. MIT
Sloan Management Review 52, 1 (Jan. 2010), 2226.
6. Hsinchun Chen, H. Chiang, R.H.L., and Storey, V.C.
Business intelligence and analytics: From big data to
big impact. MIS Quarterly 36, 4 (Apr. 2012), 11651188.
7. Jacobs, A. The pathologies of big data. Commun. ACM
52, 8 (Aug. 2009), 3644.
8. Kiron, D. and Shockley, R. Creating business value with
analytics. MIT Sloan Management Review 53, 1 (Jan.
2011), 5763.
9. LaValle, S., Lesser, E., Shockley, R., Hopkins, M.S., and
Kruschwitz, N. Big data, analytics and the path from
insights to value. MIT Sloan Management Review 52,
2 (Feb. 2011), 2122.
10. McAfee, A. and Brynjolfsson, E. Big data: The
management revolution. Harvard Business Review 90,
10 (Oct. 2012), 7883.
Charles K. Davis (ckdavis@post.harvard.edu) is the
Cameron Endowed Chair and Professor of Information
Management in the Cameron School of Business at the
University of St. Thomas in Houston, TX. He was recently
a Visiting Scholar at the Center for Transportation and
Logistics at the Massachusetts Institute of Technology,
which supported this research.
Copyright held by Author.

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