What is big data?

Big data refers to extremely large data sets that may be analysed to reveal patterns, trends and associations relating to human behaviour and interactions.

Big data will include more than just financial data, and the data can come from anywhere, either internally or externally generated.

Internally generated data can include, for example, website tracking data and accounting systems. Externally generated data can include, for example, social media and industry data.

The characteristics of big data are:

• Value – big data enables an organisation to add value, for example, by identifying a customer’s purchasing habits and targeting the right products at them at the right time.

• Variety – refers to the different forms the data can take, including text, images, GPS data, video files and audio.

• Velocity – data will be constantly streaming from sources such as social media and is available in real time.

• Veracity – data sets may contain inaccuracies and bias, so the data needs to be verified before it can be relied on as accurate. This will require the users to apply professional scepticism to big data.

• Volume – big data is available in large quantities.

Benefits and limitations

Some of the benefits of big data include:

• Faster decision making – real-time processing of data will result in faster decision making, giving an organisation a competitive advantage over their competitors.

• Focused marketing – a business can use big data to analyse trends in the market and focus their marketing.

• Insight and understanding – the data can reveal patterns and insight into how the organisation operates. This would help identify any potential unknown issues and improve productivity.

• Driving innovation – using the data from customers, would enable an organisation to understand a customer’s needs and improve products accordingly.

• Risk management – risk management processes can be supported by data analytics.

Some of the limitations of big data include:

• Security of data – if an organisation does not have the resources to manage the data, then there is a risk of data being lost or leaked. The organisation must ensure they protect the data from leaks, hacking, or data losses.

• Data protection – some of the information collected via social media platforms is from personal sources. An organisation will need to ensure they adhere to the data protection principles.

• Lack of knowledge and skills – the systems are rapidly changing, so is the requirement of skills to use big data systems. A business will require skilled data professionals to manage big data.

Question

Which of the following is not a characteristic of big data?

• value

• variety

• visual

• velocity

• veracity

• volume

Answer – visual

• Karen Groves is an AAT tutor and Faculty Director – Accounting, at e-Careers.