Thursday, October 27, 2011

Big Data Analytics – The McKinsey Mash – Part One



THREE!...separate McKinsey articles released this month about Big Data (links are below), a topic we chatted about early last month here at Treasury Café.

Big Data in Brief
To quickly refresh, Big Data is in one sense just what it would seem – really, really large amounts of data. In the Wikipedia definition the sets have become so large they “become awkward to work with using on-hand database management tools”. Analytics software vendors, such as SAS, promote tools that can handle these things anyway.

According to some sources, the total amount of data is increasing at a rate somewhere between doubling every two years to ten times in the next five years (see “Big Data in the House” for links).

They are measuring data in terabytes now (I could have sworn these were extinct millions of years ago!). So the bottom line is we ain’t seen nothin’ yet.

So What?
Why should a finance and treasury organization care about this? As discussed earlier this week, finance and treasury is one of the preeminent analysis centers within an organization. It may be the most able to work with analytical processes and information in some outfits. They will be working with Big Data.

Even when they are not the strongest producer, they will be one of the strongest customers of Big Data. The output of the analytics process, when done correctly, will enhance the quality and degree of knowledge with respect to critical finance and treasury’s processes – cash flow forecasts, financing contingencies, organizational strategy and scenario analysis, and risk management (interest rate, forex, commodity prices).

McKinsey argues that Big Data is a “game changer”, and for this reason interest should be piqued at the very top of the organizational pyramid. In its Trusted Advisor role, finance and treasury have a stake in the game.

Let’s Take It from the Top
Given its potential impact, McKinsey recommends that the CEO ask 4 questions: “What’s the Prize?”, “How Do I Build a Skill Base?”, “How Do I Get the Organization Behind Me?”, and “How Do I Scale This Up?”.

As a trusted advisor from the field of finance, the answers are: “We can help you figure that out”, “It resides here and leave the rest to us”, “We are already behind you”, and “We can help plan for that and execute it”.

So What, Exactly, is the Prize?
The answer to this question lies in the realm of competitiveness, strategic assets, and organizational transformation.

Big Data changes competitive dynamics. A “sizable US retailer” woke up to find a “different, far nimbler” type of competitor, “seemingly out of the blue”, due to that competitor’s “investments in its ability to collect, integrate, and analyze data”.

In addition, “…big data may well become a new type of corporate asset that will cut across business units and function much as a powerful brand does, representing a key basis for competition.”

Finally, Big Data will change competition “by transforming processes, altering corporate ecosystems and facilitating innovation”

Key Takeaway
Big Data, while somewhat confusing, is an element of the organizational landscape that must be addressed. Undertakings in this area can lead to:

1)      Heightened competitiveness,
2)      Competitive advantage,
3)      Value-generating assets, and
4)      More effective/efficient organizational operations.

Who can be against that?

·         Is Big Data real or just a passing fad?
·         Is competitiveness important to your organization? Can Big Data help?

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Mckinsey Links:


  1. In order to stay competitive, organizations should move to take advantage of new tools for doing business. Whether it's social media or analyzing big data. That implies that specialists are needed to help utilize those tools.

  2. Maddie,

    We must all keep up with the Joneses so to speak!

    Someone I was talking with this morning mentioned how the pace of change seems to be accelerating. Seems like fast learners will do well in our current age.