Knowing is Owning - Power of Data

Written by - Vibhav Bhat and Yash Prashant Bhave

PGDM Finance- TAPMI, Manipal

Have you seen 'Billions'? Or have you heard the name Bobby Axelrod? If you have then you must be knowing how much structured data or information can change the game. A hedge fund manager around whom the entire industry revolves. Mesmerizing to see how he takes decisions and how they work out. But how can one manage to make perfect decisions all the time? Answer lies in data science.

Background

Data science is not a new profession. Back in 1962 when mathematician John W. Tukey predicted the effect of modern-day electronic computing on data science; it gave birth to an entire field of study. In 1964 the first desktop computer “Programma 101” was unveiled. Any analysis that took place then was rudimentary than the ones that are possible today with all the advancements since then.

By 1981 IBM had released its first personal computer. After just two years in 1983 Apple launched its first personal computer with a graphic user interface. It took almost two decades to make a shift from collecting the data to converting data into information and knowledge. Today companies are trying to build human intelligence on this knowledge through ML and AI implementations.

In 2009, Google Chief Economist, Hal Varian, told the McKinsey Quarterly that he was concerned with the deficit of individuals qualified to analyze the “free and ubiquitous data” being generated. But over time the concerns are resolving. Also, more and more companies have started realising the power of data and leveraging it.'

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Sectors using Data Analytics:

So why is data so relevant in today’s world? Why are all companies spending so much resources on leveraging data? Today we have sophisticated tools and technologies that extract the information out of tons of data. The insights generated by leveraging this tremendous data actually depicts trends and areas of improvements that would otherwise go unnoticed. Modifying a small segment in a big process or chain can have a landslide effect in terms of profits and efficiency. The segment to tinker with to achieve this is discovered through data analytics and big data.

Fig: Sectors leveraging Data

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Real World Applications

Insights generated using data science is helping companies to move towards the hypothetical perfect frontier. Billy Beane as manager of Oakland A’s baseball team transformed how sports was played in 2001. The plot of movie ‘Moneyball’ reveals the power of data that the team leveraged to come out from bottom of the table and hold a winning streak of 20.

UPS supply chain that handles over 19 million packages, including goods of E-commerce shipments, is delivering accurate and timely service across the globe. It leverages the massive data repository not only to optimize their delivery routes and services but also to predict the future demands in a region and deploys its resources efficiently to cater to it.

One of the most peculiar applications of data is what food chains have in place. They store order data of all the customers to leverage on personalization. Given the customer satisfaction is majorly derived from personalization today these chains create a central repository of all past orders of customer, customization requested for previously and other details such as day, time and locations. These are then utilized to showcase the customized recommendations for each customer. It also reduces the repeat from the customer's side regarding the customization and other inputs. This increases both efficiency and customer satisfaction at the same time. Starbucks has gone further and utilized weather and surrounding factors as well to determine customer requirements.

One of the most important areas of application is the investing domain. It involves analyzing tremendous data in real time and taking decisions to exploit gaps in the market to make a profit.

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Future-

Data is the new oil in today’s world. As all companies move towards leveraging data it might reduce the advantages that can be gained in the market over competitors. However, the actual realization for each player might be in different areas. Overall, it will benefit everyone given the increase in efficiency and customer satisfaction in the case of the service sector. The business world is inching towards an ideal horizon with technology such as AI and ML but data analytics is what is giving the boost needed.

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