In 2012, the value of big data equity in the UK was estimated at £12 billion a year or 0.7 percent of the annual Gross Domestic Product (GDP). Four years flew by and the second report by the Centre for Economics and Business Research (Cebr) puts the opportunity at £46 billion by 2020, or 2.2 per cent of GDP – nearly four times the original value.
And that’s just big data analytics adoption. The Internet of Things (IoT) could deliver a further £16 billion to the UK economy in 2020, making the total £62 billion.
Big data and the IoT combined are expected to generate £322 billion in revenue for the UK economy from 2015 to 2020. That's twice the size of the combined education, NHS and defense budgets for 2014-15, and more than one-fifth (22 percent) of the UK’s net public debt.
This extra revenue to the UK economy should be taken seriously when you consider how the UK government – as evidenced by The Chancellor’s recent budget – is having to tighten spending, amid predictions of an economic slowdown.
Manufacturing bucks the trend
Big data and the IoT are expected to bring much needed relief to the manufacturing sector. Big data is expected to inject a healthy sum of £57 billion, along with £27 billion of IoT value by 2020.
This is largely driven by the diversity of firms in the industry and the variety of areas that will benefit from new efficiency gains. Benefits are multifold. Over time, the industry should expect improvements in many areas, including supply chain management and enhancements in customer intelligence.
For example, one of our customers provides cranes to ports and industries. By looking at sensor data from the cranes, they can detect -- in advance -- when repairs or maintenance is needed. This maximizes the time their cranes are in service, reduces repair costs and optimizes spare part availability.
Other key industry sectors set to benefit most are telcomms and retail.
Customer intelligence sparks adoption for telcos
As you can see in our report, The Value of Big Data and the Internet of Things to the UK Economy, the telecom industry will experience the highest current rate of big data analytics and IoT adoption at 67 percent and 61 percent respectively. However, by 2020, retail banking is expected to leapfrog telecoms and become leaders in big data analytics adoption at 81 percent, while the telecoms sector remains ahead in IoT adoption at 81 percent.
There are plenty of other interesting findings and industry sector comparisons in the report. What’s certain is that in coming years more organisations from multiple industries will embrace data and the IoT to make better decisions to improve efficiency, risk management and uncover new business opportunities.
So the real question is: What’s holding some businesses back from doing this now?
Barriers to adoption
The skills gap is something we’re all aware of – we need more data scientists and people in the workplace now (as well as future graduates) with skills in handling and analysing data to meet the current demand.
Technology advances have helped. The latest data visualisation solutions, for example, can be used by people who aren’t necessarily experts in statistics or data science. The outputs are easy to understand and solutions that have a predictive analytics capability built-in do much more than simply historical reporting. Cloud-based as-a-service offerings also allow organisations to effectively hire analytical expertise if they don't have it in-house.
But a major barrier can be creating a valid business case. This may require the leadership and/or culture within an organisation to become more data driven. Often the question is: "How do we justify the investment -- and how will new technology be integrated into what we have?"
A way forward
Well, organisations can easily build a business case. There may be a specific business problem that they know they can resolve with data – that might be something that we could help them with using SAS Results. This is analytics-as-a-service where we provide a solution and expertise to answer that particular problem. If it’s a more complex big data issue, then you can experiment with your data to explore potential ROI using our Big Data Innovation Lab.
SAS solutions are scalable and can be integrated with existing technology from other vendors, so there’s no need to ‘rip and replace’. We have many customers whose analytics platform is a combination of SAS and other technologies.
As our report on ‘The value of big data and the Internet of Things to the UK economy’ clearly shows, many organisations will be adopting solutions to exploit big data and IoT over the next few years – the ones that don’t risk being left behind by the competition.