Data is more than just a management fad; it could be a technological revolution
14 January 2013
This blog is the first in a series of five pieces that will provide an introduction to data, both big and small. Rather than focusing purely on the technical challenges posed by huge datasets, this primer will focus on how we can use data for our benefit, and how it could drive economic growth. Today’s blog begins by looking at the technologies behind data, and arguing that together they constitute a new “general purpose technology” that will transform every part of the economy.
There is a lot of hype about big data. It is, according to numerous outlets, the Next Big Thing, just like cloud computing a few years earlier. Much of the commentary makes big data sound like the latest management fad, an IT development that will pass in a few years. The truth is that data is far more significant than is often made out. When put into a broader digital context, it could be a truly transformative technology, the second phase of the ICT revolution that has driven economic growth for the last 30 years. Adopting and using data effectively will be a key source of growth over the coming decades, and a key challenge for businesses and public bodies of all types.
So what is big data? In a narrow sense, it is the ability to process vast quantities of data and turn it into useful information. That data, whether it’s about a consumer’s online shopping habits or the in-flight performance of a jet engine, can be extremely valuable to businesses, and sometimes to consumers too. But the significance of big data is not about size – it is how the data is used that matters. When combined with the rise of ubiquitous digital networks and the proliferation of mobile devices, big data becomes a broader and far more transformative idea. This group of data- and digital-related technologies and techniques is on the verge of becoming a new general purpose technology, one that will transform every part of the economy.
In its own right, most data is rather arcane, of little interest to all but the keenest of number-lovers. Likewise, most of the commentary on data has been largely unimaginative, fixating predominantly on the amount of data out there (hence “Big Data”), rather than explaining why data is useful in the first place. The real challenge, the one that occupies the most forward-looking companies, is working out what we can do with this data, how we can make use of it (and create economic growth in the process).
So why is data so important? The prize for those who work out how to use data effectively and imaginatively is enormous; the range of potential uses for data is vast. Data could make the complex systems that underpin daily life run more smoothly; it could vastly reduce the amount of resources and time we waste; it could redefine the relationship between businesses and consumers, helping people get more of what they want; it could free up labour from mundane information-based tasks to other, more creative and more productive tasks.
Because of this range of opportunities, data has implications for every business and every sector of the economy, as well as a few industries that do not yet exist. In future, data will probably be used to improve and streamline most of the things we do, most of the time without us realising. And at the same time, our actions will feed back into this world of data, helping it to grow and create new opportunities. Because of this ubiquity, data is almost certainly a new general purpose technology – one that will transform the way the whole economy works – and is likely to be the biggest source of economic growth over the next decade or so.
What is more, data is fast becoming a new class of economic asset, a newly minted economic resource. If we can work out how to trade in data effectively, it should be extremely valuable, a bit like discovering gold for the first time. Just as we have created markets to trade in labour, in money, in intellectual property, so a market for data is emerging. When companies like Facebook, whose only significant assets are its customers’ data, can be valued – even if only fleetingly – at $100 billion, it is clear that data has a market value of some sort. Getting a better handle on how that value is determined will be a huge challenge for modern economics, along with questions about what types of data we should allow to be traded, and who should own data in the first place.
The technologies behind the data
There is a tendency for analysis of big data to focus on specific technologies or analytical techniques, to the exclusion of the bigger picture. But data only becomes truly transformative when combined with a group of other related digital technologies – many of which we now take for granted – which allow data to be used in a multitude of different ways. When considering the full social and economic implications of data, it makes sense to consider all of these related technologies together, rather than divide them up into silos. The most important of these technologies are:
- Big data” – the ability to process and structure large amounts of raw data into useful information. This ability is based on continued advances in computing power, improved methods for collecting data (particularly through semiconductor “chips” ), and a wide range of statistical and analytical techniques. The data processed can be on anything from consumer shopping habits to the performance of jet engines or Formula 1 cars;
- The internet of things” – the ability of devices and machines to communicate with one another without human guidance. This development enables infrastructure and industrial systems to become “smart”, such that they require less human input, are easier to monitor and repair, and waste fewer resources. The technology may be applied to anything from smart central heating systems to more efficient energy grids;
- Mobile devices – the rapid proliferation of smart phones and other internet-enabled mobile devices provides a far more flexible and ubiquitous means for consumers to interact with digital networks. These devices enable people to customise things more readily, can help monitor people’s movement and collect data, as well as sorting data according to location. This development enables a far greater degree of consumer involvement in digital networks;
- Cloud computing – the shift from storing data on individual computers to handling it centrally on a “cloud”. This enables wider, easier and more flexible access to digital networks;
- Other possible advances in computing technology – besides the relatively mature technologies listed above, there are other emerging technologies that could offer further opportunities for using data. Among these, quantum computing ( a new approach to computing which could radically increase the ability to perform certain tasks)and wireless charging (which could make it far easier to run networks of sensors for long periods) stand out. There will almost certainly be other important technologies that emerge in this field. However, the impact of emerging technologies is very hard to predict.
Each of these technologies is significant in its own right, but it is their ability to combine that makes them particularly powerful. When taken together, these technologies enable companies to build a vast, ubiquitous network that can be accessed by people and devices all over the world. This network can gather vast amounts of data, which can be processed into valuable information. It can interact with customers and employees, with people both customising their choices and feeding back geographically tagged data into the system, creating a virtuous learning circle. Devices can also be linked up to this network, monitored, and controlled to reflect customer needs. The possibilities offered by these interlocking technologies are enormous, and growing all the time.
The impact of these technologies, on our lives and on the economy, will be explored over the next two blogs.