Big Data Potential and Strategic Use: Insights from McKinsey Analytics Report

Original article: https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/advanced-analytics-nine-insights-from-the-c-suite

The potential of big data is continuously growing. Fully leveraging it means companies must incorporate analytics into their strategic vision and use it to make better, faster decisions.

The potential of big data is continuously growing. Fully leveraging it means companies must incorporate analytics into their strategic vision and use it to make better, faster decisions.

Is big data just hype? On the contrary, early research offered only a partial view of its ultimate impact. A new McKinsey Global Institute (MGI) report, "Analytics Era: Competing in a Data‑Driven World," shows that the range of applications and opportunities has expanded and will continue to do so. With rapid technological advances, firms now face the challenge of integrating new capabilities into their operations and strategy while positioning themselves in a world where analytics could disrupt entire industries.

In 2011, the MGI report highlighted the transformative potential of big data. Five years later, we still believe this potential is far from exhausted. Several technology trends are converging at an accelerating pace. Data from digital platforms, wireless sensors, virtual‑reality applications, and billions of mobile phones is doubling roughly every three years. Storage capacity keeps increasing while costs plummet. Data scientists now have unprecedented computing power, enabling them to design ever more sophisticated algorithms.

Previously, we estimated the value that big data and analytics could create in five specific sectors. Revisiting that estimate today shows uneven progress and a large amount of value still waiting on the table. The greatest advances have occurred in location services and U.S. retail—both areas dominated by digitally native competitors. In contrast, manufacturing, the European public sector, and healthcare account for less than 30 % of the potential value we highlighted five years ago. New opportunities have emerged since 2011, further widening the gap between leaders and laggards.