Wednesday, May 15, 2013

Big Data - are you the house or the played?

Coming back from the EMC World conference in Las Vegas I was looking at the people playing on the slots and making ridiculous bets at Craps and wondering 'don't these people know anything about statistics?'.  Lets be clear I get the idea of it being fun, but when you sit next to someone on a blackjack table who twists when the dealer is showing a six and they've got 15 is just depressing.

There is a business lesson for us here about the power of data and in particular the differentiation that Big Data will have between businesses.  Those that really leverage Big Data and Predictive analytics and integrate it back into business processes will have a significant 'house' advantage over their competition.  The retailer who knows what the next hot trend will be or who can negotiate prices based on a long term demand view will under-cut and out perform their rivals.  In the same way as Vegas knows the returns on the slots and table games and innovates to improve their odds so Big Data and Predictive Analytics will help some companies dominate their sector.

Things like Hadoop, R and the like are just tools in this journey and companies that focus on the technology are like gamblers who claim to have 'a system' for a game like roulette.  Sure they might get lucky a couple of times but over time they are just going to lose to the house.  The companies that win will be the ones like the casinos which run statistics and predictive models to a level that helps to assure their advantage.

So are you the house or the played?

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