Bits and bytes in the boardroom

Bits and bytes in the boardroom

Directors need to understand the opportunities and challenges of big data and be prepared to ask the right questions to help their organisations develop an appropriate and strategic approach to capturing, analysing and capitalising on the voluminous and rapidly increasing available data.

In just the last few years, the term “big data” has emerged from the obscure corners of the IT department to become a hot topic of mainstream discussions in boardrooms around the world. Board members need to understand the complexities and have a grasp of the issues surrounding big data and, equally important, be prepared to ask the right questions moving forward.

Big data is the enormous amount of electronic information being produced every minute through a variety of channels including bank transactions, orders and invoicing, surveys, online activities and even weather and traffic reports. This data can be defined by three important attributes:

• Very large data sets (volume).

• Produced at a tremendous speed (velocity).

• Contains structured and unstructured data from many possible sources (variety).

According to a report from the National Association of Corporate Directors, “the data that now flood the internet every second is equivalent to the data stored on the entire internet 20 years ago”. This means that analytics on the scale we are now experiencing is profoundly new to the world of business.

There are potential pitfalls, not the least of which is spending too much time and money analysing too much data for too little return

Big data is becoming a game changer for businesses. The sheer volume and overwhelming variety of the data, coupled with the split- second velocity at which it becomes available, all present technological challenges related to securing, storing and tracking the data.

Companies that can effectively utilise the information stand to uncover important and valuable relationships between seemingly unrelated, large and complex data sources. This is a key challenge and opportunity for companies and will be a differentiator for forward-leaning companies. For example, by analysing select customer data, a telecommunications company can predict earlier and more accurately than ever before when a customer is considering dropping a service or switching to a competitor. This advanced warning allows the company time to proactively engage with these individuals and retain them as customers and forecast consumer trends before they become mainstream.

Meaningful operational change comes from the top. Board members and C-suite executives need to embrace this change, identify the best talent and empower other senior executives and the rest of the organisation to adopt the best systems, technologies and analytics for their businesses. They do not need to be big data experts or fully understand all of the nuances. They do need to ask the right questions based on some widely recognised best practices for dealing with the challenges big data presents, and have the right people in place to respond. Topics to consider as a board or to discuss in more detail with management might include deciding what you want to achieve with the data, determining what is relevant and focusing on what will drive value.

Big data can mean big costs. While companies can gain a competitive advantage if they get the right information to the right people in the right format at the right time, there are potential pitfalls, not the least of which is spending too much time and money analysing too much data for too little return. Fortunately, there are tools and technologies that can help. It is important to understand what is available and appropriate for the organisation, and invest in the appropriate resources to effectively utilise data.

As companies increasingly look at the world in terms of bits and bytes, it is important to remember that sometimes it is best to stand back and look at the big picture before diving into data analysis.

What is the board’s role in all of this? Boards cannot be involved in the day-to-day activities of managing big data and big data costs. But in discussions with the CEO and other executives, board members should insist on clarity of vision and collaboration across all disciplines to maximise the return on any investment in big data. Board members should also focus on the new risks presented by big data. With information moving at the speed of light, it is important to remember that big data is a two-way street and companies should have specific policies about how and by what means they communicate with their stakeholders and the world at large. In today’s environment, one false step can be instantaneously communicated around the globe.

Capitalising on the value the data can deliver can be challenging for organisations, calling for a complete shift in organisational thinking and leadership. Board members are ideally suited to be the champions of this perspective.

Anthony Doublet is a partner at EY.

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