Is IBM a Buy on Big Data?http://www.fool.com/investing/general/2012/12/31/is-ibm-a-buy-on-big-data.aspx Doug Ehrman
December 31, 2012
While "big data" has clearly become a critical area of research for top technology firms, it is important to understand the fundamental nature of this tool before allocating investment capital. As IBM (NYSE: IBM ) explains, "[E]very day, we create 2.5 quintillion bytes of data -- so much that 90% of the data in the world today has been created in the last two years alone." This proliferation of information has created a new race among firms including IBM, Intel (Nasdaq: INTC ) , EMC (NYSE: EMC ) , and Brocade Communications (Nasdaq: BRCM ) to translate this information into some usable format.
What big data is
The most straightforward application of big data technology is to provide companies with an insight into consumer decision making, by "[u]sing advanced analytics techniques such as predictive analytics, data mining, statistics, and natural language processing, businesses can study big data to understand the current state of the business and track evolving aspects such as customer behavior." While these applications will likely start with those companies able to invest in the technology, it is easy to imagine this technology playing an increasingly important role in our lives over time.
What big data is not
In a recent Wall Street Journal interview, Stephen Sorkin of Splunk, a company in the big data analytics field, echoed Mr. Jones: "If you take any sufficiently large data sets, you are going to find correlations. You need a human in the loop to work out which are important." As an industry insider, Sorkin is well positioned to speak on the limitations of the technology.
To bring the matter to an even more human level, Lindsay Elsner, a health care executive recruiter with Link Executive Search in Minneapolis and Milwaukee, explains: "While the human and relationship aspects of this business will always be central, once this technology filters down to this level, it will be a powerful tool in providing both clients and candidates with statistically meaningful criteria by which to judge each other." As Elsner notes, big data is a tool that has the potential to aid in the decision-making process, not replace the human element. The x factor that distinguishes one job applicant from the next may remain impossible to reduce to an algorithm.
Leading the way