Steve Todd, researcher and vice president of strategy and innovation at EMC
By 2024 we will have a fully established information economy, in which data is crucial for companies that are looking to find new opportunities for competitive advantage in a predictive way. Standards-based information will be sold, donated and traded in open exchanges.
Data markets will facilitate the transfer of data between silos with greater fluidity and people will begin to trade their own data. We are already seeing several signs of this, but it is only the beginning. In this scenario, your company's data is important - that's obvious. But how important are they? How can you measure the value of such data?
Today we are going to talk about “data like the new currency” and try to establish a price. Usually your data is worth what someone is trying to pay for it. This simple transactional view does not tell the whole story.
As organizations rush to learn about and assess the opportunities and problems associated with our increasingly data-driven world, companies are facing the need to more accurately measure the true value of that data.
But do not fear, not everything is cruel and obscure. Smart companies will take notes and prepare for the future through “value-focused architecture” - understanding and creating business and IT pricing processes in the company, revealing the true value of data. Let's look at some examples of new data evaluation activities that are being carried out by organizations today.
Data becomes your new product: a recent report on innovation in the big data market, made by EMC and Capgemini, revealed that 63% of respondents consider that data monetization can eventually become as valuable to their organizations as their respective existing products and services. This can say a lot about the potential of Big Data - companies can start generating more from the value contained in the data, than from the value of the product.
Babolat, a French manufacturer of tennis rackets, manufactures Babolat Play, a “smart racket” that generates and collects data on the player's performance on the court. When creating a smart product, Babolat took the first step to add the value contained in the data. This data can become a whole new revenue stream. Babolat may, for example, sell this data to application developers of new products and user experiences, or sell the data to data mining in sports research organizations. The tennis racket can be sold once, but the data produced by it has infinite potential for monetization.
Data pricing for the worst case scenario: Large-scale cyber breaches are becoming extremely frequent, resulting in huge financial losses for several companies. As a result, insurance policies for data are becoming a necessary part of business.
Working together with policyholders, data insurance companies need to set a price for a data set that not only reflects the value of the data for the insured company, but also takes into account the diversity of factors that happen in situations of data breach. Notifications for clients, compensation and other costs such as public relations for damage control must be taken into account in the insurance price.
ACE's CyberEdge, ACE's Privacy and Network Security and Lockton's Cyber & Technology departments provide companies with coverage in the event of a breach that results in the diverse effects of a data breach.
Data in a digital bankruptcy case: Caesars Entertainment Operating Co., which controls Caesars Palace, Caesars Atlantic City and Harrah's Reno, as well as a dozen other regional properties, filed for bankruptcy earlier this year. The most interesting thing is that the most valuable individual asset being disputed is the Caesar's Total Rewards Loyalty Program, the company's customer loyalty program.
Packed with Big Data and built over the past 17 years, it is rumored that it has data from more than 45 million customers. Creditors estimate that these figures are worth about US$ 1 billion - quite a number. It exceeds the value of any physical property of Caesar in Las Vegas, which gives a good perspective on the value of the data. The program is also said to amount to 17% of the total value of all Caesar's operating assets. As the gambling industry has no agreement on data pricing policies and practices, the value of the program will be challenged in court and may result in interesting verdicts regarding data pricing.
Data transactions; Fusions and acquisitions: now data is one of the main assets sought by companies in mergers and acquisitions, in some cases more than personnel, intellectual property or physical space. In the recent acquisition of the Lynda.com site by LinkedIn, the data probably represented the largest asset obtained through the price paid for the acquisition.
Jeff Weiner, CEO of LinkedIn, stressed that the extensive library of premium videos on the Lynda.com website was an essential reason for the purchase of the company, which means that the tool was looking for Lynda.com data assets to increase its professional network. Of the value of US$ 1.5 million, it is likely that a significant portion was directed towards the purchase of video data assets.
The information economy for a better world: The TCGA (Cancer Genome Atlas, or Atlas of the Cancer Genome) aims to develop new pharmaceutical and diagnostic foci for cancer by facilitating the sharing of genetic data. This collaboration between NCI and the National Human Genome Research Institute, in the United States, seeks to encode genomic data so that common data elements, based on standards, can be shared through an open source infrastructure.
To achieve success in the information economy, any organization needs to put data at the heart of everything they do on a daily basis. Companies need to prioritize pricing of technical and commercial content data across the organization. They need to integrate this into their business strategies through the development of pricing tools and policies and services for the acquisition or sale of data. To take the leap and reach this new world, companies need to remain focused on improving the ability to perceive ideas driven by data, through the predictive recognition of new opportunities.
Some startups and traditional organizations are already making progress in this area. For the others, it is not too late. But as the information economy takes shape in the coming years, those who walk very slowly will not survive. The race has started, don't be left behind.
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