Skip to content

LATEST GARTNER REPORT: Avoiding the 10 Most Common Mistakes in Financial Services Automation

Services
Product Engineering
Define your product strategy and develop your capabilities to deliver at scale.
Data & Analytics
Deliver business value and actionable insights from your data.
Intelligent Automation
Transform and reimagine your business processes.
Microsites
Technology Radar
Trends and techniques to help you make better product development decisions.
Custom engineering and global R&D solutions
Collaborative path to your product build.
About
Redefining industries
We work with our clients to solve their most complex business challenges, engineering technology that redefines industries and shapes the way people live.
CSR
Environmental, Social and Governance
At Ciklum, social responsibility always comes first. That is why we have strengthened our commitment to creating, nurturing and sustaining a world from which every customer, employee, citizen and nation we operate in can benefit.
Industries
BFSI
We develop technology that drives your IP and provides true market differentiation.
Consumer
We can support a custom omnichannel approach for personalised experiences.
iGaming
We can help you build scalable, compliant platforms for responsible gaming.
Insights
Resources
Actionable insights on topics across all the industries we serve.
Case studies
Find out how Ciklum has helped its clients solve some of their toughest challenges.

Limitations of Big Data Analytics

October 4th 2017
By now, you’ve probably heard of big data analytics, the process of drawing inferences from large sets of data. These inferences help identify hidden patterns, customer preferences, trends, and more.

To uncover these insights, big data analysts, often working for consulting agencies, use data mining, text mining, modelling, predictive analytics, and optimisation. As of late, big data analytics has been touted as a panacea to cure all the woes of business. Big data is seen by many to be the key that unlocks the door to growth and success.

limitations-of-big-data-analytics.jpg

However, although big data analytics is a remarkable tool that can help with business decisions, it does have its limitations. Here are 5 limitations to the use of big data analytics.

Prioritising correlations

Data analysts use big data to tease out correlation: when one variable is linked to another. However, not all these correlations are substantial or meaningful. More specifically, just because 2 variables are correlated or linked doesn’t mean that a causative relationship exists between them (i.e.,“correlation does not imply causation”). For instance, between 2000 and 2009, the number of divorces in the U.S. state of Maine and the per capita consumption of margarine both similarly decreased. However, margarine and divorce have little to do with each other. A good consultant will help you figure out which correlations mean something to your business and which correlations mean little to your business.

correlations.jpg

The Wrong Questions

Big data can be used to discern correlations and insights using an endless array of questions. However, it’s up to the user to figure out which questions are meaningful. If you end up getting a right answer to the wrong question, you do yourself, your clients, and your business, a costly disservice.

Security

As with many technological endeavors, big data analytics is prone to data breach. The information that you provide a third party could get leaked to customers or competitors.

limitations-of-big-data-analytics01.jpg

Transferability

Because much of the data you need analysed lies behind a firewall or on a private cloud, it takes technical know-how to efficiently get this data to an analytics team. Furthermore, it may be difficult to consistently transfer data to specialists for repeat analysis.

 

Inconsistency in data collection

Sometimes the tools we use to gather big data sets are imprecise. For example, Google is famous for its tweaks and updates that change the search experience in countless ways; the results of a search on one day will likely be different from those on another day. If you were using Google search to generate data sets, and these data sets changed often, then the correlations you derive would change, too.

limitations-of-big-data-analytics02.jpg

Ultimately, you need to know how to use big data to your advantage in order for it to be useful. The use of big data analytics is akin to using any other complex and powerful tool. For instance, an electron microscope is a powerful tool, too, but it’s useless if you know little about how it works.


If you want to create a value of all the data that streams in your business, contact Ciklum today, our experts will set up data analytics tools that will help you increase output, make smarter business moves and drive higher profits.

Editor’s Note: This post was originally published in September 2015 and has been updated for accuracy and comprehensiveness

Subscribe to receive our exclusive newsletter with the latest news and trends