Big Data and the Internet of Things promise economic, jobs boost
In a timely shot of economic optimism, newly-published research suggests that wider adoption of both big data analytics and the Internet of Things (IoT) over the next four years will provide a welcome fillip for both the UK economy and the jobs market.
The research was carried out by the Centre for Economics and Business Research (CEBR) on behalf of business analytics and business software provider SAS; the findings based on 409 interviews with senior UK decision makers, as well as official government data.
It suggest that IoT- the network of everyday items fitted with electronics to allow them to collect and exchange data – could create a £81.3bn boost made up £72.5bn of efficiency gains, innovation benefits of £4.5bn and business creation benefits of £4.3bn, plus 67,000 new jobs between 2015 and 2020.
Big data analytics could contribute a further £240.5bn to the UK economy over the same period – via £220.4bn in efficiency benefits, £12.4bn in innovation benefits and £8.1bn in business creation benefits plus 157,000 new jobs.
The latest study follows CEBR’s 2012 report on big data analytics adoption, which estimated the value of data equity at £12bn, or 0.7% of UK gross domestic product (GDP). The latest research projects the figure to increase to £46bn, or 2.2% of GDP, by 2020.
The estimates are based on the assumption that adoption rates for big data analytics rise from 56% in 2015 to 67% by 2020 and that IoT adoption increases from 30% to 43% over the same period.
Banking poised to lead
The UK telecoms industry currently leads, with the highest rates of big data analytics adoption and IoT adoption, at 67% and 61% respectively. By 2020, the retail banking sector is expected to have taken the taken the lead in big data analytics adoption at 81%, with the telecoms sector still leading IoT adoption with a rate of 72%. Healthcare is expected to be the sector that falls behind, with big data analytics adoption of 52% and IoT adoption of only 26%.
“The news that UK retail banks are expected to be the biggest users of Big Data by 2020 shows that banks are now seriously looking to improve their customer service practices,” says Steve Edkins, chief executive officer (CEO) of data solutions specialist FusionExperience. “New entrants into the financial services sector, from challenger banks to established supermarket chains, have undoubtedly hastened this change in British retail banking strategy.
“Increased competition is forcing retail banks to unlock the power of their data in order to respond to consumer-driven changes in the market. Data is fast becoming the currency of financial service providers who need to understand customer behaviours and anticipate changes in the consumption of services.
“However, complex legacy systems have stopped some bigger banks from capturing and understanding their data. These banks will need to make better use of growing data sets such as correspondence, loan facility letters, contracts and the diversity of customer interactions if they want to offer bespoke consumer products that will allow them to fend off their more agile competitors.”
Untapped potential
However, the UK’s manufacturing sector is expected to enjoy the biggest economic benefit from big data, with an estimated £57bn boost over the period to 2020. This reflects the diversity of manufacturing firms within the sector and the variety of areas in which big data and big data analytics have the potential for efficiency gains, such as improved supply chain management and enhanced customer intelligence.
CEBR asked survey participants about the efficiency, innovation and business creation gains they have already experienced following investment in IoT and big data and then factoring in projected adoption growth of the two technologies. A total of 93% and 91% of those who said they had already invested in big data and IoT respectively said it had reduced their costs.
“Collecting and storing data is only the beginning. It is the application of analytics that allows the UK to harness the benefits of big data and the internet of things,” says CEBR chief executive officer (CEO) Graham Brough. “Our research finds that the majority of firms have implemented between one and three big data analytics solutions.
“However, the key is making sure those solutions are extracting maximum insight which is then turned into business actions. IoT is earlier in its life cycle, and will provide more data for analysis in areas that may be new to analytics, reinforcing the potential benefits to the UK economy.”
According to Mark Wilkinson, regional vice president (VP) for Northern Europe and Russia/CIS at SAS: “The global environment continues to be in a state of flux, with only one thing certain – that everything is changing.
“Just under half of UK businesses are not using any form of big data analytics and those that are will sometimes be using it infrequently in just one or a few areas of the business. Less than one in three has adopted IoT.”