Advantages and Disadvantages of Big Data

Companies in every industry and around the globe are harnessing the power of big data as the business landscape continues to evolve and grow increasingly competitive. 

Big data may seem like any other buzzword in business. Still, it’s important to understand how big data benefits a company and how it’s limited. If a company uses big data to its advantage, it can be a major boon for them and help them outperform its competitors.

Below, take a deeper look at big data and some of its primary advantages and disadvantages.

An Overview of Big Data

As its name suggests, big data describes a collection of rapidly generated, large and complex unstructured and structured data. The amount of big data is growing quickly in the digital era. 

According to Statista, global data creation will increase to over 180 zettabytes. To put this figure into perspective, one zettabyte is worth one billion terabytes (TB) and one TB is equivalent to 1,024 gigabytes (GB). For context, the modern smartphone has a standard capacity of 32GB. 

Big data comes from many sources, including social media platforms, mobile phones, public records, service networks, search engines and many other connected devices. Businesses also have a plethora of sources to access to retrieve big data.

Big data is so voluminous that traditional data processing software cannot manage them. However, companies can invest in various big data solutions, which allow virtually every department within a company to gain valuable insights from big data analysis.

Advantages of Big Data

While big data often provides companies with a gold mine of benefits, it can also pose potential challenges that could offset future gains. What are the main advantages of big data for enterprises?

1. Improves Decision-Making

Organizations can gather valuable insights about their performance with the help of big data solutions. For example, big data analytics can help HR departments with recruitment and hiring processes. 

Poor hiring practices negatively impact a company because finding high-performing candidates takes time and resources. When a company uses big data in HR, it can make these processes more efficient and effective.

2. Reduces Costs

Any professional knows how important it is for a company to keep costs down wherever and whenever possible. Here are a few ways companies are using big data to reduce costs:

• Facilitates targeted marketing campaigns to reach customers effectively
• Digitizes supply chains to improve efficiency and minimize costly disruptions
• Identifies instances of fraud to prevent loss

Leveraging big data can provide more cost-cutting opportunities than just the above examples. Netflix, for example, uses big data to save around $1 billion annually on customer retention alone.

3. Increases Productivity

IT specialists can increase their productivity levels by using big data solutions. Instead of manually sorting through all types of data from disparate sources, big data tools can automate the process and allow employees to focus on other meaningful tasks.

When companies can analyze more data more quickly, it can speed up other business processes and increase productivity more broadly throughout the organization.

4. Enhances Customer Service

Customer service plays an important role in determining a company’s reputation, customer loyalty and overall position in the marketplace. Big data analytics provide customer service departments with myriad data-driven insights, allowing managers to measure employee performance and overcome shortcomings.

Because companies have access to a wealth of information through big data, it’s no surprise that many will use it to serve their customers better.

Disadvantages of Big Data

Below are some of the disadvantages of big data companies should understand.

1. Cybersecurity Risks

As new technologies emerge in business, it’s understandable that there are some risks involved with adoption. Big data solutions are major targets for cybercriminals, meaning companies using these advanced analytics tools are exposed to more potential cybersecurity threats.

Storing big data, particularly data of a sensitive nature, comes with inherent risks. Still, companies can implement various cybersecurity measures to protect their data.

2. Talent Gaps

Data scientists and experts are in high demand as big data becomes more prevalent in business. These IT professionals are often paid very well and can significantly impact a company.

However, there’s a lack of IT workers in the field capable of handling big data responsibilities. While having access to big data can benefit a company, it’s only useful if someone with a strong background in big data works with it.

3. Compliance Considerations

Another disadvantage of big data is the compliance issues companies might deal with. Companies must ensure they’re meeting industry and federal regulatory requirements for the information they work with, including sensitive or personal customer data. 

Without a compliance officer, organizations would find it challenging to handle, store and leverage big data. For example, companies operating in the European Union must be aware of the General Data Protection Regulation (GDPR), a major data privacy regulation focused on protecting consumers. 

The role of big data is already playing a critical role in modern business. As time goes on, it’s expected that big data will continue on its growth journey and become a staple for just about every type of business, regardless of size or industry.

Big Data: Playing an Increasingly Important Role in Business

Although big data has pros and cons, company decision-makers need to understand the concept of big data and what it can do for their organization. Before using big data analytics, leaders must decide if the benefits outweigh the drawbacks. Expect more businesses to leverage big data and analytics tools in the future.