We live in an era of big data – often characterised in terms of the three “v”s: volume, velocity and variety.

Three simple examples illustrate the phenomenon. Volume – Tesco has data on the shopping habits of 15m customers going back 20 years. Velocity – Twitter receives about 12 terabytes of tweets every day. Variety – more than 200m photos are uploaded to Facebook each day. These three “v”s neatly encapsulate the reasons why we are experiencing a data explosion, one that is resulting in interesting developments in consumer markets.

So what is the relevance for business schools? They do not create big data. They do not have 15m customers or measure their Twitter output in terabytes, so is big data truly going to have an impact on them? The short answer is yes – a significant impact – and one that is already attracting the interest of new partners and competitors in the sector.

Across all sectors of the economy a crucial driver for the creation of big data is technology. Automated systems and processes often produce statistics and information as a byproduct of their core activities. In the world of education, the digitisation of learning materials is creating big data.

Take, for example, the emergence of Moocs – massive open online courses. While some universities (and indeed some individual faculty) are offering Moocs, new entrants to the education sector also recognise their potential. Providers, such as Pearson, the owner of the Financial Times, Coursera and Udacity are beginning to link with schools and universities to provide online learning materials.

A great advantage of these online programmes is that they can increase participation hugely. Reports suggest that more than 160,000 students from 190 countries signed up for Stanford’s Introduction to Artificial Intelligence course.

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As a byproduct, however, Moocs also create opportunities to capture and use big data. The progress of students taking online courses can be tracked and monitored, their engagement with learning materials recorded. Early warning signs indicating that particular students are falling by the wayside can be identified. Customised feedback, based on student progress, can be provided – think in terms of “students like you, who found concepts such as this difficult, tended to do better in tests when they used these learning materials”.

While the data generated as a byproduct of online courses provide a valuable resource in their own right, the question for business schools is how far can the reach of this information extend?

If third-party providers support delivery of online courses across multiple business schools then automatically those third-party providers start to build even more significant data sets. Such sets can be used to monitor the progress of students, assess the effectiveness of different types and forms of learning materials and potentially provide insight into how best to deliver the desired learning outcomes. If these third-party providers are shrewd, we might soon reach a stage where they know more about how best to help students achieve their desired learning outcomes than business schools do themselves.

The challenge for individual schools then is how to approach this issue of big data. Do they form partnerships with third-party providers and run the risk of creating a new and more powerful breed of educational competitor? Alternatively do schools deliberately seek to create their own big data by engaging in the world of Moocs and then build the necessary internal capabilities to harvest and analyse this information? Do representative bodies for business schools or some of the accreditation agencies intervene and seek to build capability across the business school sector?

One thing is certain – as learning materials digitise and the popularity of Moocs grows, we will see a very different model of education unfold. This model will draw on data and insight, as much as faculty knowledge and experience, to ensure that education materials and learning processes are as effective as possible.

Business schools cannot afford to ignore this potentially seismic shift in the world of education. Those schools that do are likely to find themselves falling by the wayside as others exploit the power and potential of analytics in education.

Andy Neely is director of the Cambridge Service Alliance, University of Cambridge.

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