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Executive summary
Big data technologies represent a disruptive innovation
The value of big data lies in the insights that businesses can
draw from it, rather than in the information itself.
Legal bumps
Most of all, the legal and regulatory
questions that surround businesses use
of all types of data represent a huge
barrier. Concerns such as privacy, data
protection, competition law and intellectual
property rights remain hugely sensitive.
Laws across jurisdictions are inconsistent
and constantly changing. The potential
penalties for the misuse or loss of data
are rising; for example, the European
Parliament has voted for fines of up to
5% of a companys global revenues for
data privacy breaches. More importantly,
companies that fail to consider carefully
how they use customers digital footprints
risk violating their customers sense of
privacy and risk losing those customers.
Forty-nine percent of consumers say that
they will be less willing, over the next five
years, to share their personal data. This
39%
Big data and analyticsdefined
Data comes in many forms. It may be
structured or unstructured, and it may be
generated by organizations themselves or
obtained from third parties. Big data refers to
the huge and increasing volume of the data
now available, as well as the variety of it and
the velocity at which it can beprocessed.
Analytics is the means for extracting
value from this data the tool through
which actionable insights are generated.
Without analytics, businesses have no
way of using their big data to establish
competitiveadvantage.
96%
The world currently has 6.8 billion active
mobile subscriptions, equivalent to 96% of
the worlds population.5
6 zettabytes
The volume of data generated or processed
in 2014 will exceed 6 zettabytes,
increasing to 40zettabytes by 2020.6
208,300 photos
Unstructured data is booming: every
minute 208,300 photos are uploaded to
Facebook and 350,000 Tweets are posted
on Twitter.7
49%
Forty-nine percent of consumers say that
they will be less willing to share personal
information in the next five years.8
78
59
70%
Seventy percent of consumers say that
they are never happy for companies to
share their personal data, compared with
a quarter who say they are happy to share
their personaldata.11
79%
Seventy-nine percent of businesses
believe that big data will boost revenue.12
71%
Seventy-one percent of executives
state that they are not concerned that
customersmay start to restrict the use
ofpersonal information. Thiscompares
withjust 19% who areworried.13
US$325 billion
Better analytics tools create huge value.
The mainstream adoption of big data
analytics would boost the output of
global retail and manufacturing
industriesby $325 billion.14
20%
Companies that successfully use data
outperform their peers by up to 20%.15
Content
Fueling the plane: big data
can make your business fly
25
33
80%
Eighty percent of organizations are in
theearly stages of big data initiatives.16
Ready for takeoff?
1
Fueling the plane: big data
can make your business fly
Ready for takeoff?
There is certainly a lot of hype in the market today about big data and analytics. I think people
should keep in mind that we tend to overestimate things in the near term BUT underestimate
them in the long term. There is no doubt in my mind that analytics is going to transform how
businesses make decisions and shift where and how value gets created in most sectors.
Christopher J. Mazzei, Global Chief Analytics Officer, EY
decide
what you want to achieve
with thedata
Too many organizations take a traditional
approach to data and look at the data first
allowing it to the data to drive the decisionmaking process. Rather than starting with
the data, companies should come up with
different hypotheses based on the decisions
they need to make. They should then use
data and analytics to prove or disprove
these hypotheses.
generate insight
from data
This is about turning data into the type
of information that a business can act
on. There will be practical considerations
to address, such as how to store large
volumes of data and which analytics
tools are required to extract the desired
information. This will lead to a debate
about talent: does the organization have
people with the skills and experience to
conduct this analysis, check the veracity of
data and cleanse it from errors, typos and
doublets and fill missing attributes.
How to
determine
what is relevant
Companies should focus on a relatively
small amount of data to identify current
and anticipated problems. With a better
idea of which issues they wish to tackle,
businesses can start to work out how to
capture the data they need. The data may
already be available to the business from
existing processes, or new initiatives may
be required to access it. Alternatively,
it may be necessary to look beyond the
organization for example, through
partnerships with other enterprises. In
some cases, it may take work with several
partners to identify, acquire and refine the
data. It will also be necessary to estimate
the value to be had from using data to
solve a particularproblem. In addition,
EU data privacy regulation provides that
personal data must be adequate, relevant,
and not excessive in relation to the
purpose for which it is collected or further
processed. The future data protection
regulation will be even more restrictive and
impose a minimization requirement.
continue driving
business benefits
The success of big data and analytics
endeavors will ultimately be judged on
the basis of their impact on profitability:
through lower costs or most importantly
of all through higher revenues.
Organizations, therefore, need to develop
ways to measure the specific impact of
their data efforts. Which metrics are
relevant will depend on the initiative, and
might include anything from spend per
customer to cost of capital. Developing
such metrics can enable the business to
generate value
manage risk
from insight
Businesses need processes and systems
that will disseminate the generated insights
throughout the whole organization and
will share results and best practice. A silo
approach to data in which business units
act separately and independently usually
doesnt deliver maximum value.
However, a data strategy driven from the
center will not be successful if it does not
Relevant data
Manage
data
Insights
Drive
Perform
Appropriate
data sources
analytics
decisions
Rules or
algorithms
Transaction or
behavior history
Improve
performance
Manage
risk
10
11
Life sciences
12
Maturity level
Good data storage and
collection are just beginning
to generate insights.
Holistic approach
Now improving, with
greater use of enterprisewide strategies.
Business benefits
Early stage, but potential
for gains from new
revenuestreams.
13
Consumer products
14
Consumer goods companies are often at the forefront of exploiting big data
opportunities in both consumer and customer-facing areas. They are increasingly
looking at profit and loss performance, including pricing effectiveness, promotional
effectiveness and trade spend.
Testing the results of such initiatives, where consistency of approach and visibility
of performance have always been difficult, is a major focus in the sector. The results
have been impressive: one leading company estimates that its most recent tradespend initiative, which focuses on the investment consumer goods companies make
with retail partners, has generated a sustainable gross profit improvement of 1%3% of
net sales. But there are clear challenges too. One is the diversity of the marketplaces
in which companies operate: it is not uncommon for a particular company to have a
presence in more than 150 countries.
Similarly, consumer goods companies often work with extended supply chains with
multiple intermediaries. These structures may explain why the sector appears to
have moved more quickly than others toward centralizing its data and analytics
functions often through the creation of multifunction business services operations.
Several consumer product organizations have created centers of excellence to drive
the take-up of analytics opportunities across their business. Those centers offer
Maturity level
Good in sales and marketing
areas; functions such as
supply chain, finance and HR
are now catching up.
Holistic approach
Benefiting from shift toward
multifunction business
services.
Business benefits
Being realized in both
salesand marketing,
andoperations.
15
Financial services
16
Maturity level
Good in operations and risk;
early adoption of big data into
customer and growth agenda.
Holistic approach
Good, but the struggle to
unite disparate systems
continues.
Business benefits
New monetization
opportunities are already
being explored, legal and
regulatory risks are now
being mitigated.
17
18
Trends in the power and utilities sector are leading to the emergence of vastly bigger
data volumes along the whole value chain:
In transmission, the focus on energy efficiency and reliability has swelled the
amount of data produced by sensors and monitoring equipment.
In retail, the trend is toward online smart meters and smart home applications,
which continuously generate data.
However, the level of maturity of big data technology adoption varies among the
stages of the value chain. Today, the steering of generation plant utilization as well as
the energy trading activities already depend on elaborate production and market data
models. Here, power and utilities profits from other sectors more advanced in big data
and analytics, e.g., the financial industry.
On the other hand, the full potential of big data in infrastructure operations and retail
is still to be uncovered. It is widely unquestioned that big data and analytics are the
foundation for improved grid operations (e.g., through enabling demand management
and virtual storages) and the conversion of the customer relationships. Smart
meters and smart devices, in particular, are an important new source of data that
Maturity level
Slow to adopt new
technologies, but potential
now being seen.
Holistic approach
Hampered by legacy IT issues
and the structure of many
companies.
Business benefits
There are exciting asset and
infrastructure management
opportunities.
19
Automotive
20
Maturity level
Low in customer-facing
areas functions such as
supply chain and engineering
are starting to catch up.
Holistic approach
Difficult, given complicated
supply chains, but some
progress is being made.
Business benefits
Experiments are taking place
with new revenue streams.
21
The industries like pharma, insurance, and banking are still the most mature industries in terms
of awareness of data privacy and compliance as they are already subject to sector-specific
regulations. Now, all industries are concerned by the protection of personal data, and the
million dollar question is how to use it. Ultimately, its a question of trust and reputation.
Peter Katko, Partner, EMEIA Head of IP/IT, EY
Heatmap
Very low
Low
Moderate
High
Very high
22
Life sciences
Consumer
products
Barriers Maturity
Barriers Maturity
Barriers Maturity
Barriers Maturity
23
2
In-flight turbulence:
dealing with the legal bumps
Ready for takeoff?
25
26
27
How to
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identify legally
questionable practices
Without improved information
management, an organization will have
little chance of staying in control of the
data it holds. Too many organizations
hold outdated, unnecessary, incorrect or
ambiguous data and make little attempt
to cull this poor-quality information. This
situation is problematic for any business
seeking to drive value from data. But
from a legal perspective, the lack of
good information management practices
presents a real danger: the enterprise
may even be unwittingly holding legally
questionable data.
consider
the customer in all legal
decisions
create a virtue
of data privacy
Commercial organizations increasingly
recognize that there is value to be gained
from having a reputation for good practice
with data. For example, Microsoft has
recently sought to establish such a
reputation through advertising campaigns
that have chided other businesses for
their lax data protection standards.
Facebook, meanwhile, has retreated
from strategic initiatives that caused
consternation among its users about
privacy. Other businesses have begun to
build consumer relationships by offering
29
30
31
3
On the runway or stuck
in departures? A big data
self-assessment guide
Ready for takeoff?
33
34
Analytic
competitors
Strategic stages
Legal stages
Analytic
companies
Analytic
aspirations
Localized
analytics
Analytics is used
mostly for reporting
businessas usual.
Analytically
impaired
privacy topics.
35
6
1pt
pt
2pts
3pts
4pts
5pts
2pts
3pts
4pts
5pts
818 points
Your enterprise is only beginning to
consider the potential for exploiting big
data and analytics technologies. Where
projects are being considered, there is little
attempt to coordinate activity, and business
leaders are failing to take the initiative.
Your organization may also be vulnerable
to legal risk and cyberattacks.
1929 points
Your enterprise has made some
encouraging steps toward realizing value
from big data, but there is a great deal
more work to be done. There is some
leadership from the top of the company,
and functions are beginning to work
together, but a culture of data awareness
has not yet been embedded throughout
the organization. Risk mitigation needs
tobeapriority.
3040 points
8
1pt
To what extent has the organization sought to mitigate other potential risks
related to big data and analytics, such as cybersecurity issues?
2pts
3pts
4pts
5pts
Note
This exercise is indicative only and should
not be considered a granular assessment
of your enterprises readiness for big
data takeoff, or its legal preparedness.
Individual corporate priorities will vary
from business tobusiness.
1
1pt
2pts
3pts
4pts
5pts
3
1pt
2pts
3pts
4pts
5pts
5
1pt
2pts
3pts
2
1pt
2pts
3pts
2pts
4pts
3pts
5pts
4pts
5pts
4pts
5pts
4
Appendix: further reading,
contacts and
acknowledgments
Ready for takeoff?
37
Additional EY thought
leadership resources
EY regularly publishes insights on digitalization, transformation,
governance, risk and compliance, including thought leadership on
information security topics. These perspectives are designed to
help clients by offering timely and valuable insights that address
issues of importance for C-suite executives.
Born to be digital: how leading CIOs are preparing for
adigitaltransformation, EY, 2014
ey.com/CIO
Cultural behavior and personal data at the heart of the Big data
industry: finding the right balance between privacy andinnovation
ey.com/FR/fr/Industries/Media---Entertainment/Comportementsculturels-et-donnees-personnelles-au-coeur-du-Big-data
Under cyber attack: EYs Global Information Security Survey2013
ey/com/giss
Privacy trends: the uphill climbcontinues
ey.com/bcmtrends
The Big Data Backlash, EY, 2013
38
Contacts
Authors
Drazen Nikolic
Acknowledgments
We would like to thank EYs experts across sectors and global workstreams on big
data for giving valuable insights to this point of view. Finally, we would like to thank
Longitude for helping us writing thispiece.
Christopher J. Mazzei
Kevin Koenig
Christer A. Johnson
DArtagnan Catellier
Fabrice Naftalski
Bruno Perrin
Errol Gardner
Patrick Flochel
Richard Taylor
Iain Scott
Elaine Parr
Patrick James
Torsten Kiewert
Vincent Placer
Hyong Y. Kim
Peter Katko,
Christopher Moore
SeniorAnalyst,
Global Life SciencesCenter, EY
Executive Director,
Automotive Advisory Services, EY
Senior Manager,
FSO Advisory Services,EY
Partner,
EMEIA FSO Advisory Services,EY
Executive Director,
AdvisoryServices,EY
Partner,
EMEIA Head of IP/IT Law, EY
39
Notes
1 Big Data Backlash, EY, 2013.
40
41
ey.com
42