How is Big Data Relevant to Procurement?

Or perhaps better still – what on earth is big data?

Open up any industry magazine and you’ll inevitably find a story referencing Big Data or the ‘Internet of Things’. Consultants use the terms in their sales pitches and product offerings, but there’s frequently a lack of understanding of exactly what Big Data is, and how it is relevant in a procurement context.

In this series of articles, we are looking at a few questions which should serve to give us a better understanding of this topic, and why and how it is relevant in the procurement environment.

But let’s start at the beginning…

Can Anyone Properly Define Big Data?

After a little research, it seems the answer to our first question is a resounding “No”.

If you were to ask ten procurement professionals what big data is, the likelihood is that you’ll get ten different responses. Ask ten IT professionals, and chances are you’ll get another ten, completely different, responses.

There is a great article by Gil Press on Forbes titled ’12 Big Data Definitions: What’s Yours?’. The crux of this article is that Big Data is, by its very nature, a subjective term.

While writing a much quoted research paper, US-based global consultancy firm McKinsey offered the following definition:

“Datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze,”

This definition came with the following caveat: “This definition is intentionally subjective and incorporates a moving definition of how big a dataset needs to be in order to be considered big data.”

The Oxford dictionary has defined the term as “data of a very large size, typically to the extent that its manipulation and management present significant logistical challenges.”

But the question here remains: what is a “very large size” and who determines if its “manipulation and management present significant logistical challenges”?

Agree to disagree

Regardless of how we define big data, there is a common understanding that over the last decade there has been an explosion of information (most of it digital). As we continue to do business and live our through digital interfaces, that volume of data is only going to grow.

Whether we call it ‘big data’, or simply ‘data’ as we have for the previous few hundred years, is a question for the marketers and tech journalists out there. The fact is that today we have access to more data about more people in more places than ever before.

The challenge is, how do we harness this mountain of data into information that we can use to make better business (or procurement decisions)?

This point was highlighted expertly by group of computer science researchers back in 2008 in this paper. While failing to define what big data actually is, the paper highlights that big data computing will “transform the activities of companies, scientific researchers, medical practitioners, and our nation’s defense and intelligence operations.” Evidently they were correct.

If that hasn’t brought us closer to understanding exactly what big data is, it’s certainly given a broad foundation on which to work. But how does this all relate to the procurement profession? That’s the question we’ll be answering in the next part of the series.