Data to Dollars
The successful companies of the future will be those which are monetizing their data. However, the reality is that many organizations are leaving money on the table by not monetizing their data. At the same time, we have instances like even old industrial companies Airbus which has launched their own data platform - Skywise, Airbus’ aviation data platform collects aircraft data and provides insights to partnering airlines for a fee to improve their operational processes.
There are two clear reasons which are driving data monetization – cost reduction & revenue growth. Companies are using data to increase productivity, reduce wastage and streamline supply chains to optimize costs. Extracting value from customer and sales data is being used to improve sales, customer relations and reducing customer attrition.
Per a McKinsey survey, high performing companies are more like to use data to drive productivity, efficiency, sales, customer relations and in some cases creating new business models. Companies with annual growth rates of 10% or more over the past 3 years were more likely to be already monetizing data and are doing so in more ways, including adding new services to existing offerings, developing entirely new business models, and collaborating with other companies in related industries to create pools of shared data.
Data monetization is used by several organizations to figure out completely new, untapped revenue streams outside existing domains or to enter complementary market. The 171-year-old Associated Press (AP), a venerable global media organization found out that election data with their journalists gather during reporting stories, and even older data, is highly valuable to hedge funds. AP makes that data available for them to study and make whatever algorithmic assessments they feel necessary based on the data.
The Audi configurator tool in the company’s highly user-friendly portal, allows visitors to configure their own car and it has become an important tool to gather data about customer preferences and design the next generation products. This is important as per Navigant Research by 2020, about three out of every four cars sold will be online. Companies such as Otonomo and Wejo are creating marketplaces and developing use cases for automotive data monetization by cleaning, aggregating, and productizing cross-manufacturer data. Data is also being used to configure usage-based insurance programs. GM’s OnStar program collects driver behaviour data that allows them to improve underwriting and optimize their customer base.
As per research, investment in big data will be around $76 billion and 1.7 MB of data will be created every second for every person on earth in 2020. Data monetization will become the most critical differentiating factor between organizational success and failure.
It's also important to carefully study laws governing the sharing and use of data. Laws such as GDPR and the Ethical use of Artificial Intelligence will become critical in extracting business intelligence from data. Regulatory aspect of data extraction and use will be an important subject for CXOs as well.
The biggest challenge is that most companies are unaware of the gold mine of information they are sitting on. The CXO needs to understand why data is the most valuable untapped asset of the organization. Hiring a bunch of data scientists will not create the outcome unless a data culture is created within the organization.