The Data Economy – Transforming bytes into new revenue streams
As interactions between citizens and organisations become increasingly digital, data is fuelling the economy, just as finance kick started it in the 1900s. This is being driven by an explosion in the number of connected devices on the planet – or “the Internet of Everything” – each of which generates thousands of bytes of data each year.
The Internet of Everything is a powerful force driving digital transformation across all industries and its disruptive impact is being felt by every single business. This is boosting the economy as consumers, businesses, local authorities and medical professionals alike find new ways to exploit the technology. As a result, organisations are morphing into data gathering and data insight organisations. But how can businesses exploit the data economy to realise its true potential? Here, I explore the typical traits of a data-led business and how to achieve success in the data economy.
Data businesses vs traditional businesses
There are several key differences between doing business as a traditional goods and services organisation and doing business as a data-led organisation:
- Cost – There are close to zero marginal costs associated with creating, storing and distributing data; whereas producing goods and services can be very expensive
- Rights over ownership – It is much more difficult to identify and preserve digital rights, meaning that once a data set has been sold to a customer, it can very easily be sold on to multiple third parties
- Privacy – There are huge grey areas to contend with over data security legislation, not least because countries have different rules and regulations over how information is governed, stored and accessed. This issue has recently come to light again, after the European Court of Justice ruled that the transatlantic Safe Harbour agreement is invalid. The agreement lets American tech companies, such as Facebook and Twitter, use a single standard for consumer privacy and data storage in both the US and Europe. The repercussions could be huge, forcing US organisations to transfer their European user data to Europe and follow 20 or more different sets of national data-privacy regulations
- Growth – Data businesses have the tendency to develop much faster than traditional goods or services organisations, expanding into monopoly or oligopoly structures.
Making the most of the data economy
Revenue from digital channels is set to surge, rising from 16 percent of all corporate sales today to 37 percent by 2020, according to Gartner. The time to act therefore really is now. To maximise the potential of the data era and transform bytes into income, organisations need to work carefully with their customers. Citizenme for example, is attempting to shift internet economics back in the direction of the customer, by providing a way to sell personal online data directly to advertisers of their choosing.
Today, most consumers know that data is the currency of the future and many will be willing to provide their personal information in exchange for an app or service on their smart device. But to facilitate this exchange even further, organisations need to display a certain level of trust and transparency. This will enable them to get increasing numbers of consumers to opt in; and ensure they have the security credentials in place to protect that data once it’s in their possession. Only then will they be able to stand head and shoulders above the competition and take advantage of the rich resource fuelling their revenue streams, data.