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M AY 2 0 11
m c k i n s e y
g l o b a l
i n s t i t u t e
The challenge—and opportunity— of ‘big data’
A new report explores the explosive growth of digital information and its potential uses.
Many citizens look with suspicion at the amount of data collected on every aspect of their lives. In manufacturing. manufacturing. retailing. storing. Big data allow organizations to create ever-narrowing segmentations and to tailor services precisely to meet customer needs. Companies and policy makers must also tackle misaligned incentives around issues such as privacy and security.5 million managers and analysts with the skills to understand and make decisions based on the study of big data (exhibit). The report’s analysis is supplemented by a detailed examination of five domains—health care. 3. As organizations create and store more transactional data in digital form. 2. In the public sector. as well as for policy makers. Use data and experiments to expose variability and raise performance. the amount of data available for analysis is exploding. they can collect more accurate and detailed performance information on everything from product inventories to sick days. The United States alone faces a shortage of 140. enabled by big data. the public sector.000 people with analytical and managerial expertise and 1. “smart” meters. can unlock a great deal of value. . and productivity explores the state of digital data. access to data. Companies capture trillions of bytes of information about customers. suppliers. Segment populations to customize. The report Big data: The next frontier for innovation. and operations. and mining big data for insights can create significant value for the world economy. This approach is well known in marketing and risk management but can be revolutionary in areas such as the public sector. and technology deployment. and manufacturing units to facilitate concurrent engineering can cut time to market. engineering. Make big data more accessible and timely. Transparency.2 The proliferation of data has always been part of the impact of information and communications technology. how different domains can use large data sets to create value. and other machines). increasing access to data across separate departments can sharply reduce search and processing times. The report identified five broadly applicable ways to leverage big data: 1. enhancing the productivity and competitiveness of companies and the public sector and creating a substantial economic surplus for consumers. competition. and personal-location data. Now. The scale and scope of the changes that such “big data” are bringing about have reached an inflection point. as computers and cell phones continue to pervade our daily activities and as millions of networked sensors are being embedded in these devices (as well as in automobiles. integrating data from R&D. and the implications for the leaders of private-sector companies and public-sector organizations. Can big data play a useful role? New research from the McKinsey Global Institute (MGI) finds that collecting. MGI’s analysis shows that companies and policy makers must tackle significant hurdles to fully capture big data’s potential.000 to 190.
Read the executive summary or download the full report on the McKinsey & Company Web site. products. Source: Dun & Bradstreet. and services. US Bureau of Labor Statistics. All rights reserved. equal to 140. US Census Bureau. minimize risks. and smart assets: Ten techenabled business trends to watch” “The Internet of Things” “The global grid” “Meeting the demand for data storage” 4. Use automated algorithms to replace and support human decision making. The emergence of real-time location data has created a new set of location-based mobile services from navigation to people tracking. Copyright © 2011 McKinsey & Company. McKinsey Global Institute analysis Related thinking “Clouds.000 unﬁlled positions 1 Deep analytical talent are people who have advanced training with statistics or machine learning. and unearth valuable insights that would otherwise remain hidden.3 Web 2011 Big data teaser Exhibit 1 of 1 Exhibit Demand in the United States for people with deep expertise in data analysis could be greater than its projected supply in 2018. Innovate with new business models. Sophisticated analytics can substantially improve decision making. 5. company interviews. manufacturers are leveraging data obtained from the use of products. big data. FTE = full-time equivalent. Deep analytical talent. To improve the development of next-generation offerings and to create innovative after-sales services.000–190. Such analytics have applications from tax agencies to retailers. . thousands of FTEs1 Supply 2008 employment Forecast of graduates Net of additions through immigration and reemployment of previously unemployed minus expected attrition Projected 2018 supply 2018 demand to realize full potential of big data 156 +161 –32 285 425–475 50–60% gap relative to supply given current trends.