Companies are collecting data on customers by the truckloads, hoping to understand consumers more intimately and to make better business decisions, but this practice may lead to a wealth of information being used for nefarious means, according to Servcorp virtual office vice president Simon Smith.
He was the CEO of Quantium Online, the e-commerce and online arm of data analytics firm, Quantum, for a number of years before joining Servcorp in late 2012.
Big data has been touted as the Holy Grail for understanding consumer behaviour and predicting their purchasing decisions. For that reason, data is now considered a valuable asset for many businesses and companies are actively aggregating public data, as well asfor insight purposes.
"I find the amount of information collected on people is pretty scary," Smith said at the CeBIT 2013 Big Data Conference in Sydney. He used a poignant example of how data on the masses can be abused if it gets into the wrong hands. During World War II, 75 percent of the Netherland's Jewish population was wiped out, far more than most of the other European countries that were occupied by the Nazis. Smith claimed this was partly thanks to the Dutch government's detailed civil records.
"Back then, the Dutch census had collected data on its citizens' race and religion for 30 years," he said. "The Dutch government was pretty safe back then, but then they were taken over by the Nazis.
"So it's very well that you're handing over your data, but the consequences of that need to be thought through much more carefully."
Smith is concerned that people are giving out their information too freely, and businesses, even governments, are all too happy to lap it up.
"They give out a huge amount of data, and this data could fall into the wrong hands, whether it's through hacking or unethical leadership of a business or a government," Smith told ZDNet. "That's why you don't want to give the government too much power; you might like the government at the moment, but you never know who is going to be in power in 10 years time."
While this may sound extreme, there are already examples of companies using customer data for questionable business practices.
In 2000, Amazon was caught offering big discounts on its online store to new customers, but not to repeat customers. The company allegedly identified the different groups through cookies stored on user computers.
Smith believes businesses should be clear about what data they are collecting.
"You could argue their moral stance or requirement extends no further than that — that is an issue for society and consumers to decide," he said. "People should always have a choice of whether they have their data collected or not.
"In many cases, that choice may be as stark as 'if you don't want your data collected, then don't deal with us'."
Is big data helping or hurting businesses?
Obama's 2012 re-election campaign CTO, Harper Reed, commented that he wasand just wanted IT vendors to focus on using data to produce big answers.
Smith agreed that big data can help frame the question that you may want to ask, but does not necessarily help you creatively answer it, particularly when it comes to predicting consumer behaviour.
"Because, at the end of the day, consumers don't necessarily know what they want," he said. "The data can be good at telling you what choices they reveal rather than just asking them what they want."
A number of companies are increasingly turning to social media to find out what customers want, analysing Twitter and Facebook updates to do so. But Smith warned any insights gleamed from social networks should be approached cautiously.
Social media can give a loud voice to a small group of people. Certain groups may be more vocal on Twitter, while others may not necessarily reflect the views of the wider population, according to Smith.
"In a lot of industries, like retail for example, if people tweet about a certain product, they put it at the front of the shop," he said. "There's the danger that you're merchandising the shop for the 5 percent of the people that actually tweeted about the product."
Having a large amount of data can also hinder business decision-making for companies, according to Smith.
"Having worked with companies that have a lot of data, often, that can paralyse decision-making," he said. "There's so many ways to interpret that data or a piece of information, and there would still be a huge amount of room to analyse the data and to be creative with it.
"But just because you know the numbers doesn't necessarily mean you understand the business."