Big data: threat or opportunity?
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WE HAVE OFTEN WRITTEN ABOUT THE importance of data management and analytics, especially given the proliferation of data that often results from utility smart grid investments.
A recent report from the McKinsey Global Institute shows that our industry is not alone. With computers and cell phones continuing to pervade our daily activities and as millions of networked sensors are being embedded in numerous devices (such as automobiles, smart meters and other machines), the amount of data available for analysis is exploding across all sectors.
McKinsey's report, "Big data: the next frontier for innovation, competition and productivity," looks at the vast amount of enterprise information that exists, and the challenges that organizations will face in trying to manage it. The report explores topics such as the state of digital data and how organizations can use large data sets to create value.
McKinsey's analysis suggests that companies and policy makers must tackle significant hurdles to fully capture data's potential. The United States alone faces a shortage of 140,000 to 190,000 people with analytical and managerial experience and 1.5 million managers and analysts with the skills to understand and make decisions based on the study of data.
The McKinsey report also identified five broadly applicable ways to leverage big data:
- Make big data more accessible and timely. Transparency, enabled by big data, can unlock value.
- Use data and experiments to expose variability and raise performance. As organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days.
- Segment populations to customize. More data allows organizations to create ever-narrowing segmentations and to tailor services precisely to meet customer needs.
- Use automated algorithms to replace and support human decision-making. Sophisticated analytics can substantially improve decision-making, minimize risks and unearth valuable insights that would otherwise remain hidden.
- Innovate with new business models, products and services. To improve the development of future offerings to customers, leverage data to better understand the use of current products and services.
The McKinsey report should prove quite useful to utilities looking to manage the flood of information resulting from smart grid endeavors. One thing for our industry to keep in mind is that with an increase in data, there is also a large increase in noise. The challenge is to extract the insights or wisdom from the data that will lead to greater success.