• David Grammig

Big Data Revolution - Present and Future

Dear Reader,

We will probably agree that data is the new oil of our modern societies, right? If you do not agree or do not acknowledge the importance of data to our world, then it is most likely that this article will not be of interest to you. But it should. Have you got an idea of the amount of data we produce and collect even just in a minute? It exceeds your power of imagination. There are 2.5 quintillion bytes of data created each day at our current pace, but that pace is only accelerating with the growth of the Internet of Things (IoT). Over the last two years alone 90 percent of the data in the world was generated.

When we speak about Big Data, we mean extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions, patterns, and problems, offering solutions to challenges we face due to digitalization and technological advances – but also simple everyday problems that have existed ever since.

What is the real purpose of Big Data?

In short: Increasing revenue. Data, and Big Data in particular, are the key to process optimization. Optimized processes solve problems in every aspect of life – business, healthcare, modern day agriculture, space travel or millions of valuable hours wasted in traffic. By searching for new opportunities, improving business management, controlling risks, increasing life expectancy, the leading objective is always the same: profit.

Therefore, it makes no sense to talk about Big Data without talking about business. We can’t talk about Batman without mentioning Robin.

And what does all this have to do with Family Offices?

A family office's goal is the professional but privately conducted investment and management of wealth outside the banking environment. This requires a structure by which the decision-making process is guided.

Although family offices have operated largely within their own private and closed ecosystems, they must now adapt to new and coming modern solutions to provide powerful and meaningful solutions to their clients and principals.

Family offices, always looking for ways to improve the evaluation of their assets, should take into account the wide range of possibilities that Big Data could bring.

Where does Big Data fit into the Family Office environment?

Let’s look at some case studies and practical tools available in the market.

Risk management

Monte Carlo simulation is a mathematical technique that generates random variables to model the risk or uncertainty of a given system. It owes its name to the famous neighborhood of the principality of Monaco.

Some examples of Monte Carlo’s investment simulations:

  1. Creation, evaluation and analysis of investment portfolios

  2. Evaluation of complex financial products such as financial options

  3. Creation of risk management models

Thanks to the Big Data revolution there are some powerful tools to perform scenario simulations, the most popular one being @RISK.

This tool provides you with Excel-based support for the analysis of variables, and help you in your decision-making process, taking several scenarios into consideration.

Business Intelligence

Using Big Data for the purpose of cost saving lies within the competence of Business Intelligence or financial analysts. These experts implement weekly, monthly and quarterly reports that help executives foresee results based on historic data. Many students question their teachers about the necessity to study history or ‘stuff from the past’ and every history teacher will tell them: we have to study the past to be better prepared for the future and avoid repeating mistakes. Big Data and Business Intelligence are the history class of your business. But as the Big Data tools are constantly becoming more sophisticated, they allow you to incorporate an increasing number of data sources, analyses and updates of reports are automated - in real time.

One of the most powerful and affordable tools in the market for Business Intelligence is Power BI, from Microsoft.

Real – Time Data Processing

Stratio is a consulting company that helps businesses offering Big Data and AI products and services.

An example of the use of Stratio:

“Imagine a company that has three divisions: retail, travel and insurance. It is most likely that the same customer belongs to two of those divisions but nobody knows it. Nobody knows that this customer buys in one place and in the other. Those data are not crossed. By crossing that data with the current systems is very complex and expensive. With Stratio that project would be done in four months, with open source and one tenth of the cost. No other platform in the world combines, in the same queries, the stored data with the real-time data.”

Óscar Méndez, Managing director of Paradigma Tecnológico

UrbanData Analytics, data analysis for the real estate market

The real estate market is now stepped on with lead feet. On the one hand, the profitability of real estate remains the number one objective of investors, but inflated prices bring unwanted consequences for urban planning. Hence the importance for urban administrations and managers to understand how the value and prices of the surrounding properties vary. Urban planning, the design of transport networks, investments, the choice of rent or purchase... All these decisions and projects require tangible data, and uDA acts as a provider of "processed" data, successfully. These data help large real-time portfolios to choose between different real estate assets.

We have seen some powerful tools for Big Data & Data Analytics, now let’s see some free large datasets, open to the public.

Where can I find large datasets open to the public?

  1. European Union Government Open Data Portal

  2. US Government Open Data Portal

  3. Free Amazon Datasets

  4. Facebook Graph API

  5. Gapminder data compilation

  6. The Quandl numerical data set data Finder

  7. DBpedia or data extracted from Wikipedia

Since the invention of the internet data is readily available everywhere and to everyone. The tough part is doing something useful with them.

In conclusion, Big Data generates knowledge. And knowledge is power. This data-driven power allows us to improve ways we operate our businesses, how we invest and how we asses risks.

Like Socrates said: Knowledge will set us free.

Jose is a former data analyst at Airbus defense and space. He is co-founder of GG Data Solutions and will be glad to answer your Big Data related questions. You can reach out to him at info@ggdatasolutions.com

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