BFSI VISION | Analytics

   
 


Girish VS

Managing Editor, BFSI Vision

Paralysis through Analysis

For decades, our biggest worry was data – or rather, the lack of it. We used to worry ourselves silly that we do not have the data we require for understanding the patterns of customer behavior, embedded risk and the like. Today, thanks to an explosion of digital media and with big data coming mainstream, we have swung to the other end of the spectrum. According to estimates, by 2015, we will have 7.9 Zeta bytes of data – and this is set to rise to 35 Zeta bytes by 2020. (One Zeta byte is 1,000,000,000,000 Gigabytes) And most of these will be unstructured, like photos, videos and data from social media. And there in starts the problem.

We have managed to go from sparse data to too much data. And that too unstructured. Harnessing the power of this data is a different task altogether. There are two issues here – one is the tools to analyze the data and the second, the talent needed to make business sense from the analytics. Thankfully, technology is making it easier for us to analyze data. Machine Learning – a technology that evolved in the 1960's – is coming to our help. We today have the ability to create models of predictive and prescriptive models that will learn to separate meaningful data from the noise.

The problem here is that machine learning is a black box – the business function will not understand how it works. And possibly, over a period of time, even the software guys who created it may not know how the software looks at data.If earlier our decision making was constrained by a lack of data, soon we will be in a position where we get lost in the vast amounts of data streaming in from all possible venues. With the amount of data we generate, the temptation to wait for all data to come in before a decision can be made is real. We need to remember that management is the art of using your judgment to make decisions.

Analytics provides us with the ability to slice and dice data in countless ways. And each such slice will excite us. As managers we need to be aware of the analysis trap. We need to resist the temptation for that one more analysis. Remember, the reason we analyze data is to take a meaningful decisions- in time for us to exploit a market opportunity. And avoid paralysis through analysis.