Big data allows companies to extend their insights into their customer and services. However, it also requires knowledge of how to manage data to gain the most benefit from the numbers. To do this companies need to understand the 4 Vs of big data[DJ1] – volume, velocity, variety, and veracity – and develop tools and processes to manage data and turn it into actionable insights.
Volume refers to the amount of data being generated, and in the age of big data, more data is being generated every minute than ever before. This requires companies to consider and address challenges in storing and analyzing their large quantities of data. The sheer volume of data is a value-add for companies who can quickly analyze customer data and extract insight from it to manage and improve the customer experience. The companies who are able to harness the volume of big data are the ones who stand the most to gain.
Having lots of data is not helpful unless that data can be processed. Velocity refers to the speed of the data being generated and the rate at which it’s being processed in terms of both collection and analysis. Rather than putting data into a database to be analyzed at a later time, big data is most effective when it’s analyzed in real time while it’s being generated. Ongoing analysis allows for the immediate application of findings for improvement of services.
Part of what makes harnessing big data so challenging is not only a large amount of data but also the different kinds of data being generated. Variety refers to this broad range of different types of data that can come from many different sources. In the past, companies primarily had to deal with structured data that could fit in a table and be easily analyzed and often came from a single source. Today, however, data comes not only from computers, but also devices such as smartphones and appliances, among others. Additionally, with the popularity of social media and other online platforms, vast amounts of unstructured data are being created (e.g., tweets, photos, videos, social media posts, online comments, etc.). Unstructured data cannot be ignored. Companies must be adept at analyzing the broad variety of data available – both structured and unstructured – that come from a variety of platforms to develop a more comprehensive view of your customers and a responsive engagement strategy.
Data, no matter the volume or variety you collect, can only add value if it’s accurate. Veracity refers to the quality and reliability – and uncertainty – of the data. Is the data trustworthy? Is it outdated? Has it been modified in any way? Basically, is it accurate? Data must be cleaned, current, and of high quality and reliability for it to be accurately analyzed. By understanding data’s veracity, companies will be better able to properly analyze the data and make the right business decisions based on that analysis.
A Fifth V
The four Vs lead to one other important V: Value. Value refers to a company’s ability to use data to understand their customers, improve their targeting of existing and potential customers, improve the overall customer experience, and improve business processes and outcomes. While volume, velocity, variety, and veracity are important, they won’t matter if companies can’t apply them to extract value from their data that helps them improve their services.