Why companies are investing more on data analytics
Data is the oil of the information age.
Data can help businesses understand their customers and markets better, it allows them to make smarter decisions about internal functions and operations, and it ensures managers have more visibility into the future.
With enough creativity, data can truly transform and revolutionize business.
Coca-Cola, for example, uses data to produce orange juice that has a consistent taste year-round despite the fact that oranges have a peak growing season of just three months.
The company has developed an algorithm, called the Black Book model, that combines various data sets such as satellite imagery, weather data, expected crop yields, cost pressures, regional consumer preferences, detailed data about 600 of the different flavours that make up an orange and many other variables such as acidity or sweetness rates.
In doing so, the company is able to determine how to blend the orange juice to create a consistent taste, down to the pulp content.
The global beverage company was also able to cut overtime costs by 46 percent just by analyzing data in their employee service center.
Every day, companies are finding new and innovative ways to use the data available to them — and in order to do that, they need the right analytics tools at their disposal.
A new forecast by IDC suggests that worldwide revenues for big data and business analytics (BDA) solutions will reach US$260 billion in 2022 with a compound annual growth rate (CAGR) of 11.9 percent over the 2017-2022 forecast period.
BDA revenues are expected to total US$166 billion this year, an increase of 11.7 percent over 2017.
Who’s investing in analytics?
The industries making the largest investments in big data and business analytics solutions throughout the forecast are banking, discrete manufacturing, process manufacturing, professional services, and federal/central government.
Combined, these five industries will account for nearly half (US$81 billion) of worldwide BDA revenues this year.
They will also be the industries with the largest BDA opportunity in 2022 when their total investment will be US$129 billion.
Bankers understand that their business is based on data, and harvesting and harnessing that data is becoming an important aspect of how they run their business.
Using BDA solutions, bankers can find hidden trends in the industry and uncover subliminal choices and preferences of customers. Doing so will help create better products and solutions in order to get a strong competitive advantage in the market.
Manufacturers too are realizing that they can gain access to data in new environments and use them in new and interesting ways.
The arrival of the internet of things (IoT) makes it possible for manufacturers to track products that have been sold to clients, using sensors that relay information back to them (with the customer’s permission of course).
As a result, manufacturers can tap into data that provides rich customer insights and helps them transform their product development efforts. Data from internal sources is also useful and can help fine-tune the activities in the factory for better efficiency.
The industries that will deliver the fastest BDA revenue growth are retail (13.5 percent CAGR), banking (13.2 percent CAGR), and professional services (12.9 percent CAGR).
IDC predicts that more than half of all BDA revenues will go to IT and business services over the course of the forecast.
Where is the growth coming from?
Services-related revenues will also be among the fastest growing areas of opportunity with a combined CAGR of 13.2 percent.
Software investments will grow to more than US$90 billion in 2022, led by purchases of end-user query, reporting, and analysis tools and relational data warehouse management tools.
Two of the fastest growing BDA technology categories will be cognitive/AI software platforms (36.5 percent CAGR) and non-relational analytic data stores (30.3 percent CAGR).
BDA-related purchases of servers and storage will grow at a CAGR of 7.3 percent, reaching nearly US$27.0 billion in 2022.
From a company size perspective, IDC believes that very large businesses (those with more than 1,000 employees) will be responsible for nearly two-thirds of the BDA opportunity throughout the forecast, surpassing the US$100 billion level in 2018.
Small and medium businesses (SMBs) will also be a significant contributor to BDA revenues with nearly a quarter of the worldwide revenues coming from companies with fewer than 500 employees.