Data are now woven into every sector and function in the global economy, and, like other essential factors of production such as hard assets and human capital, much of modern economic activity simply could not take place without them. The use of Big Data — large pools of data that can be brought together and analyzed to discern patterns and make better decisions — will become the basis of competition and growth for individual firms, enhancing productivity and creating significant value for the world economy by reducing waste and increasing the quality of products and services.
Until now, the torrent of data flooding our world has been a phenomenon that probably only excited a few data geeks. But we are now at an inflection point. According to research from the McKinsey Global Institute (MGI) and McKinsey & Company’s Business Technology Office, the sheer volume of data generated, stored, and mined for insights has become economically relevant to businesses, government, and consumers.
The history of previous trends in IT investment and innovation and its impact on competitiveness and productivity strongly suggest that Big Data can have a similar power, namely the ability to transform our lives. The same preconditions that allowed previous waves of IT-enabled innovation to power productivity, i.e., technology innovations followed by the adoption of complementary management innovations, are in place for Big Data, and we expect suppliers of Big Data technology and advanced analytic capabilities to have at least as much ongoing impact on productivity as suppliers of other kinds of technology.
All companies need to take Big Data and its potential to create value seriously if they want to compete. For example, some retailers embracing big data see the potential to increase their operating margins by 60 per cent.
