Big data investments and firm value
The concept of big data, i.e. massive data sets that can be analysed to reveal valuable patterns and trends for businesses, is becoming increasingly valuable for firms in advanced economies. The EU-funded DDGS - VDE (Digital data generation and streaming in the big data area: Exploiting the new value creation opportunities in the 2020 digital enterprise) project closely investigated the business value of big data for firms. Using quantitative and qualitative data methodologies, the project team outlined key initiatives taken by firms to understand how they leverage on big data for extracting value. It particularly investigated big data digital data genesis (DDG) and digital data streaming (DDS) to see if companies with DDG/DDS capabilities perform economically better than others. DDGS - VDE found that firms that are willing to leverage on big data need to have prerequisites as the availability of the right data that fit with the purpose of the analysis of big data, the appropriate technological solutions, skills, culture and the knowledge of the business where they operate. The project categorised three types of big data capabilities – data management pre-analytics, analytics, and data management post-analytics. Evidence was identified of the different impacts that exploitation of big data can lead to three levels – company level internal and external impacts and customer level impacts. The project team then studied the importance of the DDS readiness index, which enables companies to gain in-depth understanding of their readiness to exploit DDS opportunities. This also revealed that exploiting big data enhanced the business value of a company. Examining big data as a revolutionary element in value chains driven by the internet, the project looked at the hospitality and tourism industry, particularly at hotels, online travel agencies and travel websites that provide reviews of travel-related content. Using 10-year data from over 450 hotels including financial data and online user-generated reviews, it showed that changes induced by new players in the hospitality and tourism industry influence the value creation and value appropriation dynamics that characterise this value chain, impacting significantly on hotels’ revenues and profitability. The project advised governments and policymakers to help companies reap the rewards of big data by encouraging the supply of data scientists and related professionals. It also provided recommendations for managers who choose to invest in big data solutions. There is no denying that working properly with big data can enhance business performance.
Keywords
Big data, profitability, DDGS – VDE, digital data genesis, digital data streaming
