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Dr. Prasad A. Naik, Professor, UC Davis
Challenges and Opportunities in Big Data Analytics
@iValleyIC #FinTechTalk
http://ivalley.co
http://gsm.ucdavis.edu/faculty/prasad-naik
Volume Variety VelocityBig
Data
N
p
p exceeds N
N
p
Data Matrix Grows
Theoretically “Big Data” means …
Standard Theory
• Sample Size N Infinity
• Number of variables p fixed
• Ratio p/N becomes negligible
• Result?
– Tall data matrix
– p < N
Big Data Theory
• Sample size N Infinity
• Variables p Infinity at a faster rate than N does
• Ratio p/N remains “Big”
• Result?
– Long data matrix
– p > N
Big Data?
Standard Data
• Data Matrix (Tall)
• Large N, Smaller p
– p < N
Big Data
• Data Matrix (Long)
• Large N, but Larger p
– p > N
Got Big Data,But where are my Big Insights?
Two Challenges
• When N Large, but p < N
o Computational challenges
• Storage, retrieval
• parallel computing, real-time analysis
• When N Large, but p > N
o Statistical challenges
• All standard methods break down!
Need New Analytics for Big Data
Linear Regression
Logistic Regression
Principal Components
Factor Analysis
Don’t work when p > N
Opportunity: Sparsity constraints pave the way
Standard Techniques
Big Data Analytics
Sparse Analytics for Big Data
Linear Regression
Logistic Regression
Principal Components
Don’t work when p > N
Lasso Regression
Sparse Logistic
Sparse PCA
Works even when p > N
How to instill sparsity? Many ways …
Elastic Net Penalty
Lasso Penalty
Two Marketing Applications
• What drives charisma of CEOs and Founders?
• What drives liking for Super Bowl Ads?
Impact of Nonverbal Communication on Charisma of CEOs/Founders
N = 22 sales pitches 1-minute long
p = 100+ variables
Mine the gestures
Shoot videos
p/N ratio = 5X
Takeaways
• Big Data needs Sparse Analytics
o It’s not the size -- it’s the relative size
• When p/N < 1, usual statistical tools work
• When p/N > 1, sparsity needs to be incorporated
• Many ways to incorporate sparsity
o Lasso, Elastic Net
o Depends on the goals of the project
• These methods work in finance too, not just marketing!
UC Davis Launches Master of Science in Business Analytics
MSBA Program
• Starts in Fall 2017
• 10-month or 19-month
• Equal emphasis on hard and soft skills
– Hard: Data + Analytics
– Soft: Business + Practicum
You can help!
• Encourage your smart employees to enroll
• Contribute real data-driven projects for student-teams to tackle
• Be a guest speaker or donor
http://gsm.ucdavis.edu/msba-masters-science-business-analytics
