This week, two conferences on related topics are scheduled for successive days at MIT—the annual MIT Sloan CIO Symposium today and the annual meeting of the MIT Center for Digital Business Thursday. Attendees at both events will include executives responsible for their organizations’ information services.
These leaders have very important jobs these days. Information management is no longer an obscure, technical department in companies. The success of firms can well hinge on how information managers do their jobs.
Every 1.2 years, the volume of business data worldwide doubles. In the course of the two days that the conferences are being held—actually any two days this year—businesses around the world will produce more data than all of the world’s businesses produced in all of history before 2003.
This explosion of data is the result of revolutions in computers, communications, storage, and related fields. Much of the data comes from sophisticated hardware and software systems companies have installed in recent years to manage information within their companies and with clients. Some of the data is a byproduct of these other activities, and many firms aren’t sure what to do with it. The Internet also produces massive amounts of data, much of it from Web searches and clickstreams. Mobile telephone services are another growing source of data.
Not only is the volume of data available to businesses getting bigger, it is also getting better. Business data is becoming increasingly precise and accurate. For example, the US Bureau of Labor Statistics has long measured inflation by sending employees into stores to record prices, then transmit the information to headquarters, where it is compiled. A more efficient and accurate way would be to take actual sales data, transmitted digitally at the point of sale and processed immediately.
In much the same way that the microscope revolutionized biology by allowing scientists to see inside microbes and cells, new information and communication technologies will allow us to see more clearly what is happening inside businesses.
There is a growing movement in forward thinking businesses and in academia to find ways to use all of this business data effectively. The field is known variously as business intelligence, business analytics, and data driven decision-making.
At the MIT Center for Digital Business, we have been studying the impact that effective use of data can have on businesses. In one project, we took a sample of approximately 330 large firms. We measured their productivity—how much they produced in goods and services as a ratio of inputs, including labor, capital, purchased services, energy. Then, we surveyed them to determine the extent to which they use data to inform their business decisions.
We found that companies that were active users of data were 4 percent more productive than companies that were not. The finding was consistent across industries.
As the data explosion continues, more and more industries will be driven by information. And businesses looking for a competitive edge could well find it in how they use their data.
Erik Brynjolfsson is Schussel Family Professor of Management Science; Professor of Information Technology; Director, The MIT Center for Digital Business; and author of Wired for Innovation–How Information Technology is Reshaping the Economy
For more information: MIT Sloan CIO Symposium
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