Big Data Fades to the Algorithm Economy

By Anil Hari - October 13, 2015

Wherever you look in the industry, you can see one and one thing only that is constantly changing the dimension of the industry- big data. But, data cannot do anything by itself. Rather, the user of the data can lead to the directions hitherto unknown. Big data is the crude oil that needs refinement to turn it into fuel that would run the whole machine. The refining element, here, are the proprietary algorithms that solve problems to translate the results into actions. But, this secret of success is not enough for a future where the secret will definitely come out in the open. Then, rather than what, the question that will become predominant is the how. It is how you create the algorithm that will define your success.

The secret that was

The question of how brings the problem of economy of algorithm. Algorithm, in short, runs everything in this world. It has the ability to connect software, sensors, data and many other elements to ensure that automation is the order of the day. Google, Apple and many other companies have protected their valuable algorithms inside locked vaults because only these algorithms can tame the infinite amount of data flooding in from every direction. Similar investment is made by traders where their algorithm has the power to deliver better than their individual competitors. It is exactly here big data can move into a new world where, like everyday lives where nothing is enough, algorithm is not enough either.

The future of algorithm

Of course, once the present is not enough, the future comes into the question. Where does the world go from here? It is a question that haunts every software personnel. Naturally, it will be something that can not only do but also think. In short, software with cognitive ability that has the ability to drive autonomous interactions between machines. An advanced version of this would be artificial intelligence. While this sounds futuristic, it is not so. With enormous investment in all quarters, it is no longer a question of money. Organizations will try to capitalize on their algorithm by offering licensing to smaller organizations. It often occurs that multiple algorithms of a big name in the industry can be individually very useful for completely different brands.

Towards an economic technology of algorithms

If buying and selling individual algorithms become popular in the market, it will become a popular practice to have specialized start-ups since many companies will buy specific algorithms for minute purposes. Thus, these algorithms will now become stepping steps for different machines and creates an exponential nature of growth. Also, products can now have more sophisticated algorithms if there are developer teams working on the existing ones for a specialized company. Thus, organizations will no longer be valued just on the big data they can gather, but also how they utilize data to its fullest using their algorithms. Hence, CEOs should now concentrate on how they can make most of the algorithms their research can create.