Companies that take advantage of big data perform better. Yet, the vast majority of companies have not tapped into the power of big data – swathes of information that technology now allows us to process for patterns and insights – to guide their decision-making. According to a 2013 Gartner survey, fewer than 8% of companies have implemented big data technology. Although this figure is predicted to grow rapidly over the next five years, many are struggling to adjust to the big data phenomenon. In 2012, the Aberdeen Group found that the proportion of executives reporting that their companies could not use unstructured data, and complaining that the volume of data was growing too rapidly, had increased by up to 25% in the previous year.

So what must companies do to reap the rewards of big data? Much emphasis has been placed on the technology they will need to store and analyse the data deluge. However, there are many other crucial elements in the jigsaw.

Organizations must, for example, recast their decision-making culture so senior executives make more judgments founded on clear data insights, rather than resorting to gut instinct. They must recruit the in-demand data scientists who are trained to translate raw material into actionable commercial insights. In addition, they should encourage governments to supply the regulatory system and ICT infrastructure that will create a data-friendly environment.

Big data can be employed at various, steadily more sophisticated, stages. It can serve merely to increase efficiency in existing operations, yet it can also trigger a radical overhaul in an organization’s business model.

The first maturity stage, performance management, allows executives to understand their business more clearly through, for example, user-friendly management information dashboards. This would typically involve internally generated data.

During the second stage, functional area excellence, organizations use both internal and external data to improve selected areas of the business. This may involve sales and marketing techniques, such as customer segmentation and targeting, or advancements in operational efficiency. Recent examples include a German car manufacturer that used real-time performance monitoring of production machinery to increase productivity by 20%.

At the third stage, value proposition enhancement, big data starts to offer a new source of competitive advantage beyond the improvement of operations and services. Deriving from external data insights, this may include innovations such as customized, real-time recommendations, or the personalization of services to improve the customer experience.

Through using diversification of website content, one leading European bank increased sales by 12%. After logging in, customers were presented with one of several alternative websites based on their individual transaction history and segment and the company’s overall product portfolio. The content was tailored according to the customer’s predicted needs to maximize sales.

In the final maturity stage, business model transformation, big data becomes deeply embedded within the organization, shaping both the nature of the business and the mode of executive decision-making.

General Electric offers an example of a product organization that has asserted its belief in the transformative potential of big data. The company envisions that machinery and equipment will soon be loaded with sensors, making in-depth status data available in real time and across longer time spans. To exploit this development fully, GE is investing more than $1 billion in its data science capabilities.

The recent merger of two advertising companies, Omnicom and Publicis, could lead to similar transformation, this time in the services arena. With the industry striving to deliver personalized advertising messages, those players that possess the most comprehensive consumer data will have an advantage. Omnicom and Publicis believe that their combined size will produce the desired volume of data.

As big data becomes the norm over the coming years, leaders will have to embrace the game-changing opportunities it offers, or risk falling behind those competitors eagerly capitalizing on their sluggishness.

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Authors: Bahjat El-Darwiche and Walid Tohme, partners with Strategy& (formerly Booz & Company)

Image: An internet cable is seen at a server room in this picture illustration taken in Warsaw January 24, 2012. REUTERS/Kacper Pempel