Open Data is already spawning to new businesses and huge value according to McKinsey & Company
As much as a third of the three to five trillion dollars of economic value potentially released by the Open Data movement in the next decade will come from establishing benchmarks to identify areas for business and process improvements.
In a paper accompanying the research, authors Michael Chui, James Manyika, and Steve Van Kuiken revisit a topic McKinsey explored earlier this year where they identified seven key ways in which open data can drive innovation and fuel growth.
(McKinsey and Company’s Michael Chui, James Manyika, and Steve Van Kuiken. )
According to the McKinsey writers, governments are already “opening the spigots of readily usable public data” while corporate information is becoming more “liquid,” as companies share data with their business partners and occasionally with consumers.”
“Also surging is the richness of the information from data aggregators, which are assembling, rendering anonymous, and selling (to interested third parties) a wide range of data flows. Then add huge volumes of data from social-media interactions, available from providers of digital platforms such as Twitter and Facebook. “
The paper predicts the rise of third-party open-data aggregators who will sell and publish corporate data, which will include things like “customer ratings, safety records, defect complaints and recalls, and comparative price data.”
And McKinsey notes that the G8 governments in June last year adopted an Open Data Charter, which introduces the idea that the default policy should be the open publication of government data.
Three practical examples of the economic benefits of Open Data are provided;
- Energy exploration. “While the widespread sharing of seismic data is unlikely, sharing among even a few companies could produce significant new value in the oil and gas industry. Governments keen on maximizing resource wealth could take the lead in structuring processes for granting permits so that grants of initial drilling licenses would require greater sharing of seismic data. “
- Consumer insights. ” Nectar, a UK-based program for loyalty cards, which can be used at Sainsbury’s for groceries, BP stations for gasoline, and Hertz for car rentals. Sharing aggregated data allows the three companies to gain a broader, more complete perspective on consumer behavior, while safeguarding their competitive positions.”
- Agriculture.Climate Corporation which was recently acquired by Monsanto for $US 1 billion has built a valuable data feeds business by combining more than 30 years of public data on weather, 60 years of data on crop yields, and multiple terabytes of information on soil types to offer “fee-based advice to farmers and customized crop-and weather-insurance products based on sophisticated algorithms.”
There are impediments of course, not least of which is the willingness of organisations to share the information. “Consider the sharing of data to establish industry benchmarks. Even if a company uses a third party and gets assurances of anonymity, there’s always a risk that its identity might be revealed and that competitors could see how well or poorly it was doing. “
The authors also acknowledge that shared data could be seen to compromise competitive advantage and compromise intellectual property.
And they suggest tapping social data risks a consumer backlash over privacy.