Saturday, April 12, 2014

Can Big Data Backfire?

As our technology advance, big data is now a multibillion-dollar business opportunity. Business organizations from retailers to manufacturers are fast discovering the power to transforming consumer information and behaviors into strategic-profit generators through database systems, or “big data”. For example, McKinsey Global Institute, the research arm of McKinsey & Co., estimated a profit increase of 60% in their retail sector by incorporating big data. Furthermore, a recent Boston Consulting Group study also revealed that consumer data could help companies achieve greater business efficiencies and customize new products. However, while harnessing the power of data analytics is clearly a competitive advantage, overzealous data mining can easily backfire. In her article, “Big data blues: The Dangers of Data Mining,” Cindy Waxer discusses the danger of privacy invasion from database mining and analytics.   
As companies become experts at extracting information and data mining, the valuable consumer insights tends to overshadow individuality privacy. For example, the upscale retailer Nordstrom used sensors from analytics vendor to obtain shopping information from customers' smartphones each time they connected to Wi-Fi service. As a result, the move drew widespread criticism due to privacy advocating.
Furthermore, the clothing retailer, Urban Outfitters, also faced a class-action lawsuit for allegedly violating consumer protection by unknowingly obtaining customers’ address from their credit card and ZIP code information. Facebook is also often in the discussion of data privacy controversy; whether it's defending its privacy policies or justifying its actions of sharing information with the National Security Agency (NSA).
In general, although the big data strategy promotes business prosperity, but the consequences of big data abuse is also detrimental. Researches shown that 1 out of 3 Internet users said they have stopped using a company's website or have stopped doing business with a company altogether because of privacy concerns.
            According to Kord Davis (A digital strategist and author of Ethics of Big Data: Balancing Risk and Innovation), "The values that you infuse into your data-handling practices can have some very real-world consequences". These days, the seemingly solution to the privacy concerns are honesty, "Organizations that are transparent about their use of data will be able to use that as a competitive advantage," predicts Davis. "People are starting to become very interested in what's going on out there with their data, so organizations that have practices in place to share that information ethically are going to be in a much better position to be trusted," he added. Though honest business organizations are more prone to sustainable success, many CIOs and data scientists are struggling with the balance between deriving valuable information and insights from confidential data while respecting consumers' rights and even earning their trust.
            Overall, techniques for manipulating data progressively multiply. As the technology advances, database systems have become one of the most valuable assets for businesses. Nowadays, data acquisition and mining tools have proved to enhance business efficiency, and ultimately profitability. However, although a large portion of informational database concerns are focused on cyber security, the controversy surrounding big data abuse should also not be taken lightly. IT professionals are discovering that balancing the power of sophisticated algorithms with consumer rights is about more than avoiding bad publicity or lost sales. In sum, it is very important for businesses to acknowledge the importance to respect consumer privacy and invest in innovative approaches to prevent data abuse.

Waxer, Cindy. "Big Data Blues: The Dangers of Data Mining." ComputerWorld. ComputerWorld, 04 Nov. 2013. Web. 12 Apr. 2014. <>.

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