What if you discovered oil in your backyard? How would you get it extracted from your property and deliver it to customers? Where would you sell it and what would you charge? If the world’s most valuable resource is no longer oil, but data, how does your enterprise leverage the data it already creates and manages to turn what is ‘in your backyard’ into a sustainable revenue stream?
IDC’s predicts that by 2018, 50% of large enterprises will be generating data as a service revenue from the sale of raw data, derived metrics, insights, and recommendations. Providing Data as a Service (DaaS) is not a ‘Beverly Hillbillies’ scenario – I don’t believe that a few enterprises are going to get rich quickly, or that less sophisticated companies are going to have sudden power in the DaaS market. However, we will be reaching a point where the majority of companies will have plans and actual revenue from monetizing their own data. The ferocious appetite for data is driving demand for new supplies of data. In a recently study of 500 enterprises in the U.S. we found that 84% plan to increase or maintain their existing DaaS budgets.
Discussions of ‘big data’ have focused on leveraging data in the context of internal use of data for decision support, driving efficiencies and seizing new customer and product opportunities. Enterprises have corralled resources to better manage and cleanse their data – and many have created cross-functional capabilities to exploit data in ways that did not seem obvious initially. The next logical step for them is to seek a return on this data investment externally.
Data services have existed for decades, but a combination of large diverse firms (i.e. Bloomberg, Dun & Bradstreet) and specialists in specific industries or processes have dominated this market (IBM’s Weather Company, HG Data, IRI, IQVIA, etc.). What we see now is that enterprises that have successfully gained value from their internal data are beginning to provide their own data as a service to others who may be connected in the value chain – or in entirely different commercial spheres. The emergence of social media data gives greater visibility into consumer and buyer mindsets. The emergence of IoT is shining a light on non-consumer content for the intelligent and connected world.
Firms with a heritage in the information service industry have an early advantage because their names are synonymous with quality information. However, even these firms must undergo digital transformation that involves introduction of new products, new partnerships, and new pricing and delivery methods. While other well-known enterprises may have valuable data for this market, it is more difficult for them to offer a pure data product directly. However, there are two other options where a number of firms have been successful.
The first is an increase in the number of products and services that are being enhanced by adding data as a service. Organizations that have data that could add value to their existing lines of business, such as software or navigation applications, have been creating higher value (and higher priced) offerings. Software that includes process benchmarks, or navigation that also includes real-time traffic updates from simultaneous users are examples.
Another option is to provide data through existing platform offerings. IDC sees both software vendors (Oracle Data Cloud, SAP Data Network, Qlik Data Market) and independent marketplaces (Dawex, q Data Marketplace) evolving, and providing the opportunity for organizations that are not data-as-a-service specialists to participate in this market more easily. Using a recognized platform helps to make the offering visible to a wider audience and facilitates the incorporation of the data into a multisource and multidimensional feed for new use cases. These platforms can also aid with the many capabilities that may be new to companies from non-information service industries, such as:
- Aggregating, storing and processing data
- Packaging, pricing and distribution practices
- Understanding and abiding by data sovereignty laws and privacy regulations
In the foreseeable future, a rapidly expanding number of private and public-sector organizations are expected to monetize data externally. These organizations will need to create a data monetization strategy and navigate a market that has many potential conduits between data buyers and sellers which will help new entrants to the market create revenue more quickly. By the end of 2018, the majority of large enterprises will answer the answer the question of “How much money are you making from your data?” with a real number.