The word algorithm implies something that is too technical for most of us to consider. However, algorithms are now a key part of modern life. Businesses are using algorithms in more pervasive and integrated ways to leverage the ridiculous amounts of data our digital existence generates. Big data is nothing new, companies have been struggling with how to successfully leverage their data using all sorts of analytics, but algorithms are now taking center stage, and look like they will be at the core of any business that wants even a remotely successful digital presence.
What has caused the demand?
Companies have been obsessed for some time over how to leverage big data, and with the expansion of the IoT, the urgency didn’t look like it was going to abate any time soon. However, there were several challenges around big data that many companies were struggling to address.
The sheer volume of data they were recording was becoming ridiculous. The amount of digital real estate needed to store the data was immense. This created another challenge; rather than just knowing how to store all this data, companies needed to store it in a way that was retrievable in a useful manner, as well as secure.
Presuming they managed to vault these two hurdles, they were then faced with the best way to interpret such vast amounts of data from so many different sources. The interpretation is generally where the difference between success and failure lay.
For obvious reasons, companies in the tech industry seemed to have the most success interpreting their data, turning it into their most valuable asset. The success of these companies has led other large corporations to take action, collecting and trying to leverage their own data like mad.
However, traditional analytics have proved to be a bit hit and miss. The incessant and increasing flow of data was screaming out for a solution that was more dynamic and actionable in real time. This is where algorithms come in. They are the answer to many companies’ problems with data.
What’s so special about algorithms?
As algorithms and AI advance, technology is being revitalized. Even the manufacturing industry is undergoing a revolution that has been termed ‘Industry 4.0’. This is because of advancements in the control systems that can now control, analyze, integrate, and improve the whole manufacturing process, regardless of the scale or number of sites.
An era where algorithms are operating completely independently is upon us. They can understand customer behavior, learn on their feet, and perform actions accordingly. This will allow them to work in the background optimizing every aspect of your business, from your supply chain to your factory floor. They will probably also be controlling the car that drives you to work in the near future.
Algorithms are already a hidden part of our daily lives, from Google to Facebook, and their use is only going to increase.
Where are algorithms already used?
Whether you like it or not, if you use a computer, tablet, or smartphone, you’re already interacting with several algorithms. Smartphones use them in the autocorrect feature on your phone. Social media platforms use them for several things, especially to maximize their advertising efforts. Even online casinos use algorithms to help them generate random outcomes for their games.
One of the earliest champions of algorithms in the digital space (after all, it was the basis for their business model) is Google. If you perform a search using Google, then their algorithm is the catalyst for the results you see. The results you see will impact your next decision, whether you’re making a life choice or purchasing a product. Google’s algorithm affects the day-to-day decisions of countless people in this way. The Google search alone must make Google the world’s biggest influencer of all time.
While this might be starting to sound a little nefarious, it’s important to remember that Google is constantly updating their search algorithms to ensure we see the most relevant and highest quality results. It might not be perfect, but hopefully, it’s moving in the right direction.
Facebook is another popular resource that relies heavily on algorithms. All of the attention in the news lately has been largely centered on how their algorithms decide what posts, articles, and media to show its users. The Facebook algorithm largely constructs your feed based on past interactions with friends. However, other algorithms are working away in the background to build a profile of your usage so their paid advertisers can target their audience more effectively.
Even UPS use telematics and algorithms to dynamically route their 55,000 trucks that perform 16 million deliveries every day. They estimate this saves them around 85 million miles per year, which is equivalent to a financial saving of $2.55 billion dollars.
Where is it all heading?
Machine learning is gaining relevance. The ability of algorithms to look at historical and current data, learn and gain useful insights from the data at its disposal, and then apply what they have deduced to make informed business decisions and predictions. This ability is taking us into the area of a computer that can continually learn about relevant things, and apply what it learns automatically to your processes, increasing productivity, efficiency, and increasing profits.
As machine learning has progressed, we are seeing the emergence of deep learning. Deep learning is based on neural net technology. By this process, the machines can discover new patterns without exposure to historical data. This requires a very complex set of algorithms.
The consistency of AI and algorithms removes the factor of human error and bias, creating a stable and consistent path to growth. As it becomes more pervasive, we can expect to see algorithms becoming a critical component of every successful business. Data is available to everyone, meaning algorithms won’t remain in the realm of big corporations but will work equally as well for small and medium-sized companies. As popularity grows, the prices drop, making this technology more accessible to everyone.