The Digital Transformation Playbook: Rethink Your Business for the Digital Age

Big Data on Tap from the Cloud
An additional trend is shaping the impact of big data: a revolution in the 
storage and accessibility of both data and data processing. In the old data 
paradigm, for a business to manage data, it needed to invest in owned infra-
structure to collect and hold all of the data as well as any tools to analyze 
it. This significant capital requirement led to disparities among companies, 
with many unable to afford the sophisticated use of data. Today, businesses 
no longer need to store their own data, and even small businesses are 
increasingly able to access the leading tools for using unstructured data. 
The reason is the rise of cloud computing.
Think of voice-recognition systems like Siri or Google Now on our 
smartphones. There is a reason Siri doesn’t work when our iPhones are 
offline: the computations required to understand spoken language and 
respond to it are too intensive to be managed with the processors on a cur-
rent smartphone. Yet Siri works perfectly fine when able to access the cloud. 
All our device needs is a steady connection so that it can send our voice to 
a remote server with all the power necessary to process that unstructured 
data and respond in real time.
Increasingly, more and more computing applications and services 
are delivered seamlessly over the Internet, with the real processing power 
residing in the cloud rather than on our devices and computers. Amazon 
Web Services (the company’s huge B2B computer services division), Micro-
soft, Google, and others are all driving a shift to a computing environment 
where businesses increasingly meet their needs through subscription and 
SaaS offerings rather than by buying and installing the most powerful com-
puters on their own premises.
Cloud computing has profound implications for scalability and small 
business. Services like Watson are available “on tap” to businesses, just like 
cloud-based storage and customer databases are for small businesses. This 
means that big data is not the exclusive terrain of the world-class companies 
with huge IT departments. Any business can tap into best-in-class analytics 
tools today—from cloud providers like SAP and IBM—paying only for the 
data and the processing it uses. Big data doesn’t have to have a big price tag.

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Three Myths of Big Data
Although the rise of big data—the new unstructured data sets and the tools to 
make sense of them—is influencing every industry, there are some myths and 
misconceptions about what exactly has changed for businesses.
Myth 1: The Algorithm Will Figure It Out
I also call this the myth of the magic algorithm. Early reporting about big data 
created a false impression that to build the smart cities and businesses of the 
future, we would just put the best supercomputers together, let them compare 
all our unstructured data sets and unearth unexpected patterns, and voila! Your 
insights would appear on screen. In reality, this is not how data analytics is done.
Making sense of big data still requires a lot of involvement by skilled human 
analysts. There are several reasons for this. The quality and accuracy of the data 
are critical. How was the data collected? Is there a margin of error? Is it truly a 
representative sample? Are different data sets in the same format so they can be 
accurately compared? Much data wrangling is still done by human analysts, as 
these issues are not yet fully automated by software.
Biases can also exist in the algorithms used to look at the data, based on the 
assumptions of those who program them. An algorithm can be designed to filter 
applicant resumes to find the ones that most closely fit the profile of employees at 
your company. But past hiring may not reflect the diversity or skills you are seek-
ing from future employees.
Most importantly, you need managers to ask the right questions of your data. 
What outcomes is your business most concerned about? Which kind of data pat-
terns could you even act on? Algorithms are increasingly good at finding answers, 
but they still need humans to pose the right questions. Tariq Shaukat, chief com-
mercial officer of Caesar’s Entertainment, puts it this way: “If you start with the 
data, you will end with the data. The question that I ask my teams all the time is, 
‘What question are we trying to answer?’”
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