1.What is a common thread in the examples discussed in this application case?

2. Can you think of other data streams that might help give an early indication of sales at a retailer ?

3. Can you think of other applications along the lines presented in this application case?

Alternative Data for Market Analysis or Forecasts Getting a good forecast and understanding of the situ- industry sectors. For example, by analyzing ation is crucial for any scenario, but it is especially shadows of the oil storage tanks around the important to players in the investment industry. Being world, it claims to have produced a better daily able to get an early indication of how a particular estimate of worldwide oil storage than is availa- retailer's sales are doing can give an investor a leg ble from the International Energy Agency (IEA). up on whether to buy or sell that retailer's stock even Spaceknow keeps track of changes in factory before the earnings reports are released. The prob- surroundings for over 6,000 Chinese factory lem of forecasting economic activity or microclimates sites. Using this data, the company has been based on a variety of data beyond the usual retail data able to provide a better idea of China's indus- is a very recent phenomenon and has led to another trial economic activity than what the Chinese buzzwordalternative data. A major mix in this government has been reporting. alternative data category is satellite imagery, but it also Descartes Labs uses satellite data to predict includes other data such as social media, government U.S. corn harvests with more accuracy than the filings, job postings, traffic patterns, changes in park- U.S. Department of Agriculture does. Better ing lots or open spaces detected by satellite images, forecasts can have huge financial impacts on mobile phone usage patterns in any given location at futures trading. An older example of this was any given time, search patterns on search engines, and a company called Lanworth that also predicted so on. Facebook and other companies have invested corn crop estimates. Lanworth was acquired in satellites to try to image the whole globe every day by Thomson Reuters and is integrated in their so that daily changes can be tracked at any location Eikon service. and the information can be used for forecasting. DigitalGlobe is able to analyze the size of a the last 6 to 12 months, many interesting examples forest with more accuracy because its software of more reliable and advanced forecasts have been can count every single tree in a forest. This reported. Indeed, this activity is being led by start-up results in a more accurate estimate because companies. Here are some of the examples: there is no need to use a representative sample. Facebook used its image recognition engine to Kensho, a company backed by Goldman Sachs, is analyze over 14.6 billion images of every corner reportedly analyzing data from multiple sources of the world to identify areas of low connectivity. (mentioned earlier) to build a trading engine. RS Metrics monitored parking lots across the These examples illustrate just a sample of ways United States for various hedge funds. In 2015, data can be combined to generate new insights. Of based on an analysis of the parking lots, RS course, there are privacy concerns in some cases. Metrics predicted a strong second quarter in 2015 For example, a story in the Wall Street Journal in for JC Penney. Its clients (mostly hedge funds) 2015 reported that Yodlee, a company that provides profited from this advanced insight. A similar personal finance tools to many large banks and thus story has been reported for Wal-Mart using car has access to millions of customers' credit card trans- counts in its parking lots to forecast sales. actions, sells such data to other analytics firms that Orbital Insights uses satellite imagery data to can use the information to develop early predictions provide macroeconomic indicators for various of how sales are trending for a particular retailer. (Continued) Application Case 7.1 (Continued) Such information is highly sought by stock market Driving-Investment-Performance-With-Alternative-Data.pdf traders. This story led to an uproar about the cus- (accessed July 2016). tomer information being used in ways not author- Hope, B. (2015). Provider of personal finance tools tracks ized. There is also a concern in some circles about bank cards, sells data to investors. wsj.com/articles/provider- the legality of developing such advanced predictions of personal-finance-tools-tracks-bank-cards-sells-data-to-inves- tors-1438914620 (accessed July 2016). about a particular commodity or company. Although such concerns will eventually be resolved by pol- Orbital Insight. World Oil Storage Index. orbitalinsight.com/solu- icy makers, what is clear is that new and interest- tions/world-oil-storage-index/ (accessed July 2016). ing ways of combining satellite data and many other Shaw, C. (2016). Satellite companies moving markets. quandl.com/ data sources are spawning a new crop of analytics blog/alternative-data-satellite-companies (accessed July 2016). companies. All of these organizations are working Steiner, C. (2009). Sky high tips for crop traders. http://www.forbes with data that meets the three V'svariety, volume, .com/forbes/2009/0907/technology-software-satellites-sky-high-tips- and velocity characterizations. Some of these com- for-crop-traders.html (accessed July 2016). panies also work with another category of data- Turner, M. (2015). This is the future of investing, and you prob- sensors. We will discuss those in the next chapter ably can't afford it. businessinsider.com/hedge-funds-are-analys- when we review emerging trends in analytics. But ing-data-to-get-an-edge-2015-8 (accessed July 2016). this group of companies certainly also falls under a QUESTIONS FOR DISCUSSION group of innovative and emerging applications. 1. What is a common thread in the examples dis- Sources: Dillow, C. (2016). What happens when you combine arti- cussed in this application case? ficial intelligence and satellite imagery. fortune.com/2016/03/30/ 2. Can you think of other data streams that might facebook-ai-satellite-imagery/ (accessed July 2016). help give an early indication of sales at a retailer? Ekster, G. (2015). Driving investment performance with alterna- 3. Can you think of other applications along the tive data integrity-research.com/wp-content/uploads/2015/11/ lines presented in this application case? SECTION 7.2 REVIEW QUESTIONS 1. Why is Big Data important? What has changed to put it in the center of the analytics world? 2. How do you define Big Data? Why is it difficult to define? 3. Out of the Vs that are used to define Big Data, in your opinion, which one is the most important? Why? 4. What do you think the future of Big Data will be like? Will it leave its popularity to something else? If so, what will it be? 7.3 Fundamentals of Big Data Analytics Big Data by itself, regardless of the size, type, or speed, is worthless unless business users do something with it that delivers value to their organizations. That's where big analytics comes into the picture. Although organizations have always run reports and dashboards