Big Data: The next frontier for innovation, competition ...Big Data: The next frontier for...
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Big Data: The next frontier for innovation, competition, and productivity January 25, 2012 Fujitsu North America Technology Forum CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Transcript of Big Data: The next frontier for innovation, competition ...Big Data: The next frontier for...
Big Data: The next frontier for innovation, competition, and productivity
January 25, 2012
Fujitsu North America Technology Forum
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
McKinsey & Company 1|
Data storage has grown significantly – shifting markedly from analog to digital after 2000
SOURCE: Hilbert and López, “The world’s technological capacity to store, communicate, and compute information,” Science, 2011
Global installed, optimally compressed, storage
Analog
Digital
50
300
250
200
150
100
0
Data storage,
exabytes
2007200019931986
McKinsey & Company 2|
Everyone, everything, every interaction generates “exhaust” data
Transactions
Social
Mobile
Audio/video
Scientific/engineering ‘Internet of things’
McKinsey & Company 3|
Computation capacity has risen sharply
SOURCE: Hilbert and López, “The world’s technological capacity to store, communicate, and compute information,” Science, 2011
Global installed computation to handle information
1012 million instructions per second
20072000199319860
1.0
2.0
3.0
4.0
5.0
6.0
Overall
This computational power is equivalent to almost 1.3 billion laptops
McKinsey & Company 4|
150
231
278
319
370
536
697
801
825
831
870
967
1,312
1,792
1,931
1,507
3,866
Insurance
Discrete Manufacturing
Government
Utilities
Communications and Media
Banking
Securities and Investment Svs.
Construction
Professional Services
Education
Healthcare providers
Wholesale
Consumer and Recreation Svs.
Retail
Transportation
Resource Industries
Process Manufacturing
Companies in all sectors have at least 100 terabytes of storeddata in the United States; many have more than 1 petabyte
Average stored data per firm with more than 1,000 employees, 2009, terabytes
SOURCE: IDC; US Bureau of Labor Statistics; McKinsey Global Institute analysis
>500 = WalMart data warehouse in 2004
235 = Library of Congress collection in 2011
US EXAMPLE
McKinsey & Company 5|
Americans burn 1,800 calories per day
This data has gone from being highly macro…
McKinsey & Company 6|
Americans burn 1,800 calories per dayHe burns
2,133 of calories per day
She burns1,489 of calories
per day
She burns 1,567 of calories
per day
She burns 1,945 of calories
per day
He burns 1,438 calories
per day
…to very personal
108 Cal 319 Cal 531 Cal 742 Cal 954 Cal 1165 Cal 1377 Cal 1588 Cal 1800 Cal 2011 Cal
Typical You
Weekly Overview
You burned an average of
1438 cal/dayfrom activity this week
Your activity level is rated
Lightly activeYou are in the
84th percentileof all men 25-35 years who are overweight
McKinsey & Company 7|
Five ways for big data to create transformational value
5 Innovate new business models, products, and services
4 Replace/support human decision-making with automated algorithms
3 Segment populations to customize actions
Create transparency1
Expose variability and enable experimentation2
McKinsey & Company 8|
Big Data companies have outperformed their respective markets and have created competitive advantage
SOURCE: Bloomberg and Datastream; annual reports; McKinsey analysis
PercentOther competitors
9
14
11
9
24
12
14
9
12
10
22
11
Revenue 1999-2009(10YR CAGR)
EBITDA 1999-2009(10YR CAGR)
Big data leaders
Grocers
Online retailers
Big box retailers
Casinos
Credit cards
Insurance
6
8
9
5
5
-1
2
-1
5
1
-15
3
McKinsey & Company 9|
Big data is already driving productivity and innovation
Europe public sector administration▪ €250 billion value per
year
▪ ~0.5 percent annual productivity growth
Global personal location data▪ $100 billion+ revenue
for service providers
▪ Up to $700 billion value to end users
Manufacturing▪ Up to 50 percent decrease
in product development, assembly costs
▪ Up to 7% reduction in working capital
US health care▪ $300 billion value
per year
▪ ~0.7 percent annual productivity growth
US retail▪ 60+% increase in net
margin possible
▪ 0.5–1.0 percent annual productivity growth
McKinsey & Company 10|
Global personal location data
Real world healthcare data
Impact of using big data to drive innovation and productivity is order of magnitude larger than revenue from providing big data services
$100 billion to telcos
$600+ billion in using for fuel savings, logistics, local targeting
$10 billion to data service providers
$300 billion in shifts profit pool shifts payers, providers, pharma
McKinsey & Company 11|
To fully capture this opportunity several major issues must be addressed
Description
▪ Access to “foreign” data
▪ Integrating with own proprietary data
▪ Deployment of technologies
▪ Legacy system or inconsistent data formats
▪ Ongoing innovation
▪ Privacy concerns
▪ Data security issues
▪ Intellectual ownership and liability issues
▪ Shortage of talent
▪ Leadership that understands big data
▪ Aligned workflows and incentives
Data policies
Technology & techniques
Organizational change & talent
Access to data
McKinsey & Company 12|
Three types of talent are needed to capture value from big data
SOURCE: US Bureau of Labor Statistics; McKinsey Global Institute analysis
~1.5M
~300K
Potential gap by 2018
~150K
Deep analytical
Big data savvy
Supporting technology
▪ Actuaries▪ Mathematicians▪ Statisticians
▪ Business managers▪ Financial analysts▪ Engineers
▪ Computer programmers▪ Computer software engineers ▪ Computer system analysts
Talent needed
US EXAMPLE
McKinsey & Company 13|
Implications for organization leaders
Identify potential value creation opportunities and threats
Build internal capabilities to create a data-driven organization
Address data policy issues
Demonstrate value
Inventory data assets, proprietary, public and purchased
2
3
4
5
1
Architect data-driven transformation5
