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8:53 am ET
May 27, 2014

Big Data

Beware ‘Big Data’ Hype, Reports Warn

  • Article
  • Comments (6)
  • Big Data

  • Forrester

  • By
  • Elizabeth Dwoskin
Citing Amazon as an example, Forrester says companies will begin using data to make predictions that influence their operations.

Is “big data” revolutionizing business, or a passing technological fad?

In two forthcoming reports, Forrester Research takes the middle ground.

In a survey of 259 marketing and business-development executives at large and medium-sized retailers, financial-services companies and consumer-products companies, Forrester found a lot of uncertainty about big data. Roughly one-third of the respondents said the term big data was “very confusing.” Only 9% said they plan to implement big-data technologies within their departments over the next year.

In a parallel survey, however, Forrester found that 452 executives who manage technology at those same companies were more familiar with the technologies.

“Big data rhetoric is at an all-time high,” the authors write. “Technology vendors tout products with claims that seem incredible.”

The report nonetheless encourages readers to take advantage of growing amounts of data from Internet users, devices and sensors. “The data explosion has changed how we do business,” says Forrester. “Every interaction, every communication, every touchpoint creates a digital breadcrumb – a piece of data that can be analyzed and manipulated.”

Forrester cites retailers building apps to help customers navigate stores, Uber disrupting the taxi business with smartphone data, and Netflix testing millions of customer preferences before launching the successful miniseries “House of Cards.”

The report highlights companies in traditional industries that have used data to change business practices or increase revenue. Clorox , for example, attributed a sales increase in early 2013 in part to mining social media for flu-trend data, and using the information to decide where to stock products. Farm-equipment maker John Deere and biotechnology company Monsanto are analyzing data from seeds, satellites, and tractors to help farmers them decide what and when to plant, and how to distribute seeds.

Next up, Forrester says, will be companies that use data to make predictions that influence their operations. As an example, Forrester cites retailer Amazon’s recent patent for so-called “anticipatory shipping” – in which the company would begin shipping products based on its predictions of what customers located in a certain geographic area would want.

At the same time, Forrester warns that companies amassing large caches of data about consumers likely will face pressure from individuals and regulators over privacy, security and the ways they collect and manage the data. It cites, for example, a 2013 settlement between the Federal Trade Commission and the social network Path for collecting user contacts from minors without their parents’ knowledge or consent. The social network paid $800,000 to settle the charges, without admitting wrongdoing.

“Informed consumers will increasingly want to know what companies know about them and how their data is being used and shared,” the report says. It cites regulatory fines and penalties for companies that mishandled data, or didn’t fully disclose how

The report also takes a stab at defining big data, which has become something of a parlor game in Silicon Valley. Merriam-Webster, which added “big data” to its dictionary last week, defines it as “an accumulation of data that is too large and complex for processing by traditional database management tools.”

Forrester’s definition – “the practices and technology that close the gap between the data available and the ability to turn that data into business insight” – is a memo to executives to start paying attention to the value of data.


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