Janne Lautanal, Chief Ecosystem and Technology, Fintraffic
Data is the new oil—the concept is usually credited to Clive Humby, the British mathematician who established the Tescos Clubcard loyalty program as early as 2006. But although data and oil both can generate value, the analogy has always been strained.
Tim O'Reilly, in his excellent article of February 2021, compared data to sand. O'Reilly's analogy has merits: not all sand is good, and sand requires processing, but in some aspects is lacking because sand has become the second most sought after natural resource in the world and is quickly running out.
Unlike oil or sand, data will not be used up; data is accumulating more and more every year. It would therefore be worth comparing the data to manure, an ever-growing, rapidly deteriorating natural resource that requires a lot of processing, rather than oil or sand.
A growing, rotting pile of data costs money.
The exponential growth in the amount of data dilutes the value of data if it is left unused for too long - just as a pile of manure rots and only produces emissions. Just as it was with oil in the 19th century, in many cases, it can take time to find use cases for data, and you can't always find them. Sometimes the use cases can be surprising - you can find your Kopi Luwak for data.
80 percent of the data created is unstructured, and up to 85 percent of all data is useless in one way or another. A large part of the cost of data management is therefore in finding and processing the right, relevant data. Unlike oil, data is not very versatile, and data often requires the editing and combining of different types of data. A large part of the cost of information systems is therefore spent on integration and data processing (ETL). Managing the ever-increasing volume of data comes at a cost. McKinsey estimates that the cost of data management has increased by up to 50 percent between 2019 and 2021.
Fertilise with data!
Often, even data producers are so entrenched in their own operations and beliefs about the potential of their own data that it is impossible to find new data potential from within the organisation. Someone else - a group of students, another company or even a data business consultant - could very quickly bring the business opportunities to light. Ideally, these new business opportunities could be created without the original data owner even needing to take on much business risk, but rather with some kind of revenue-share model of the use and the outcome.
"Unlike oil or sand, data will not be used up; data is accumulating more and more every year. It would therefore be worth comparing the data to manure"
The value of data will often increase when used and applied over and over again. Merging two or more complementary data sets can provide more insight than keeping them apart.
It would therefore be better to say bluntly that data is new manure: piled up, it starts to smell; spread out, it can fertilise a large field to produce the crop.
It costs more every year to maintain a growing amount of data. So it's fair to say that unused data just stinks and consumes resources, but in the right way, it feeds the growth of the whole company and the ecosystem around it.
Find the potential!
Not all data is equally valuable. Identify the areas of data that are really useful and provide the right level of service in the right place - value first. There is a strong case for data exchange; this is a give-some-get-some game. And in line with the principles of open innovation, experiment - fail fast, scale fast.
It takes time to discover the potential of data. To speed things up, open up the data boldly. By opening up data, parties can save on service development, help create new business and create better services for users. Therefore, understand for customers and partners to continuously improve your service. Data-driven revenue generation can become a profitable business as long as you do not hinder development in the early stages by keeping the data pile rotting.
Let's dismantle the stinking data piles and enable their power for new growth!