In a changing digital world, old business models are being disrupted and the winners will be those who can adapt quickly. We are in the transition from web 2 into web 3. Web 1, 2 or 3, it doesn’t really matter, because it is all data, right? Then pay attention because it is not that simple.
“it doesn’t really matter, because it is all data, right? “
Web 2 is company centric, with a need for data availability, quality and interoperability for monetization. Topics most companies struggle with. Web 3 is user centric, meaning users own and control (their) data, with the potential share, collaborate and monetize data.
The last decade, the focus was on web 2. You can recognize this in the high volume of cookies and apps to capture consumer data. The growth of central data platforms that store, harmonize and share data. And the rise of the function of data scientist.
How will the web 3 differ? Web3 is powered by a decentral network of peers that enable data sharing between users and applications. This allows for a more easy, transparent, and secure exchange of data. Exactly the struggles of web 2.
This data exchange is gaining traction in the mainstream, supported by the now acceleration increase of blockchain and on the horizon, the (meta)verse (The Metaverse: new frontier that re-imagines retail & health. And data re-imagines the Metaverse. – D8A directors). Decentral data sharing in web 3 allows users to interact directly without a central intermediary company. It also allows for an even faster growth of data, which will require adjustments in the analysis of data as well as an opportunity to increase development of AI solutions. And – important – it gives the user control where and how to share which data with who. In theory, the ultimate data privacy.
Web 3 does require rethinking data security, good to keep that top of mind.
Blockchain (or smart contracts) is a good example of how data provenance (what is the source of the data, initial data quality and which data processing activities have taken place. Provenance is important for companies and consumers alike) can be controlled. By capturing every step of the way in smart contracts, every step is retraceable. Relevant for companies, e.g. for fraud detection and prevention. Or being able to build a – decentral – large volume of scientific data, one of the key challenges today.
And for users, blockchain is relevant to understand how their data is used and if it is high in demand, thereby creating monetization possibilities for users. Increasing the incentive for data sharing. Decentralized data democratises data access, enabling companies AND users to create, deploy, and use specific instruments that were before restricted Here the shift from company-centric to user-centric becomes clear. Data can become your income.
Either in web 2 or 3, data is the foundational layer of innovation. Web 3 extends that with building meaningful relationships between companies and users (cut-out the middle men), improved quality of data, elevated possibilities and value of digital transactions and increased data privacy.
As a user, what do you need to have in place? Create a thorough understanding of your rights as owner of your own personal data. Share your data were and when you want, but act wisely. Understand which data can have value where and monetize accordingly. Have your data available in a personal data vault in accordance with Self Sovereign Identity principles. In short, become a data expert!.
There has never been a better time to create impact with data & analytics. More and more data is available, computing power is increasing fast and analytical techniques are getting mature. Being data driven is the talk of the town, for sure it is part of the strategy of your organization. In the last decade, most companies have invested in data & analytics initiatives to enhance efficiency, increase sales and comply to regulation. Yet, these initiatives have not yet resulted into full business value. Organisations are getting ready for the next wave; getting value out of data & analytics products.
1. Climbing fast; the importance of data in value creation
Data is an asset and has (future) economic benefits. During the last years, the volume, complexity and richness of data has grown exponentially — mainly driven by e-commerce and Internet of Things or sensor data-and is expected to continue to do so (see also: McKinsey). In fact, so much of the world is instrumented that it is difficult to actually avoid generating data. We have entered a new era in which the physical world has become increasingly connected to the digital world. Data is generated by everything from cameras and traffic sensors to heart rate monitors, enabling richer insights into human and “thing” behavior.
Add to that the current growth in analytical power (e.g. analytics, machine learning, artificial intelligence). And the confluence of data, analytical and computational power today is setting the set for the next wave of digital disruption and data driven potential for growth.
“… the confluence of data, analytical and computational power today is setting the set for the next wave of digital disruption …”
This growth has a number of preconditions. Of course, organisations need to recognize that data is an asset. It also requires that required data is correct, available and (re-)usable. And potential revenue generation need to be qualified, e.g. through data marketplaces, data-as-a-service integration, digitization of customer interactions, product development, cost reduction, optimize operations and improving productivity.
In the last ten years data & analytics initiatives within organisations mainly focused on:
→ Controlled data & analytics, e.g. data organisation, data governance, privacy or trusted analytics;
→ Centralized source of available data, e.g. data platform or data engineering;
→ Insights value chain, e.g. deriving insights through use-case based machine learning, process mining or BI self-service by a team of analytics experts.
Not all initiatives bring the desired results. For example, deriving new insights is often considered as innovative, but any executive will recognize the sprawl of self-generated BI reports each claiming their own version of the truth, making it complex and time consuming to turn insights in to company steering. And although these initiatives are by-and-large based on business cases such as efficient reporting, comply to regulations or end-of-life for legacy systems, controlling and centralizing data & analytics, they are in fact supporting hygiene factors. And there is the trend that algorithms seem to be commoditizing, e.g. Google and Amazon are providing free access to their analytics libraries. In the end, this trend will transform any insights value chain into becoming a hygiene factor as well.
In any case, the results of most current data & analytics initiatives are not a breakthrough innovation or digital disruption.
2. Approach your data with a product mindset
So, while most data & analytics efforts are — still — performed to facilitate and improve the insights value chain, the real innovation is productization of data & analytics. Organisations need to look beyond their team of skilled data & analytics professionals with governed data sources, latest analytics tools and technologies if they want to leverage data to improve and increase revenue. To actively contribute to this, organization should start viewing data & analytics through a product development lens.
This means that we need to transform from data & analytics (point) solutions mainly focused on internal value towards the creation of full-fledged data & analytics products. Productization involves abstracting and standardizing the underlying principles, algorithms and code of successful point solutions until they can be used to solve an array of similar and relevant business problems. In the end, this should lead to a robust portfolio of data & analytics products.
To enable this organisations need to have the following foundation in place:
Bridge the gap between data & analytics and business – In many organisations, data & analytics and business execution are totally separate. The business lacks understanding of what is possible and therefore will ask for everything, without prioritization and lacking a requests funnel. This leads to the development of data & analytics point “solutions” without full business potential. Move beyond the current hype of ‘data literacy’ and actually involve relevant (business) stakeholders into data & analytics. Embrace change. And be practical by starting with data quality, ownership or relevant use-cases to improve daily operations through analytics, BI or robotics. Expand from there and be persistent. Truly and sustainably embedding data & analytics in an organisation is a long-term process.
Anchor data & analytics competences at executive level – Business impact from data-derived insights only happens when data & analytics is implemented deep within and consistently throughout the organization. This requires commitment, ownership, sponsorship and direction of a leader with the authority and sufficient understanding of data & analytics and its potential.
Understand potentials— the value of data & analytics depend on uniqueness and end uses How to monetize the potential of data & analytics? Its value comes down to how unique it is, how it will be used, and by whom. Understanding the value is a tricky proposition, particularly since organizations cannot nail down the value until they are able to clearly specify its uses, either immediate or potential. Data & analytics may yield nothing, or it may yield the key to launching a new product line or making a scientific breakthrough. It might affect only a small percentage of a company’s revenue today, but it can be a key driver of growth in the future. General rule of thumb is that uniqueness of data will increase its value, so find that (hiddenn) gem. Where possible, join unique sets to further enhance the value and potential of data. Product development takes an investment in time, people and technology. Set up a — technical — test-and-learn lab environment where pilots and beta-version products can be developed and by which the value can be further explored and understood. Include domain experts, data scientists, data experts. Capture client- and end-user needs in this lab environment and transform it into solutions and products. Identify quick wins for early adopter clients, to learn and develop how products work in a client environment. Set up a cooperation with sales departments and potential partners. Standardise, improve and scale products .
Take sufficient time — be lean where possible – Many organisations have invested resources and investments in data & analytics initiatives, e.g. hiring and/or educating data scientists, data lake implementations and data ownership. They are eager to finally monetize the data so that it indeed is ‘the new oil’. But if products are unclear or without market relevance, there is the risk of missing targets and being overtaken by competitors. At the same time, be opportunistic for quick results, perform pilots as much as possible to create an early adopters client base.
3. The coming wave: data & analytics product opportunities
Potential data driven product opportunities are well researched, identified and described. Think about e.g. IoT-based analytics for leasing companies and car insurers, real-time supply and demand matching for automotive, logistics and smart cities, personalized e-commerce and media, data integration between banks and B2B customers and data driven life sciences discovery. Besides, resolving the above mentioned foundation, a detailed approach on to realise these opportunities is less clearly defined. This paragraph contains the 5 main steps that all organisations should follow:
Step 1: Conceptualize the product
Identify a data & analytics product that meets the market needs within the lab environment. To identify relevant opportunities, include product expert, business groups (e.g. super users, sales and marketing) and -potential — clients. The process involves product definition and identification of data required for the product (which should include sourcing data creatively). Organisations with unique internal data have an increased opportunity to create highly valuable products with a good competitive edge. E.g. a bank with an agricultural background can use unique data which are highly sought after by other financial institutes. And a supply chain company can enhance their planning software with integrated robotics to increase efficiency for their clients, enhancing churn and sales opportunities. Take the uniqueness of available data into account early on in the process. Determine the market position and potential business model for the prototype. There are three main prototype categories, i.e. a data-as-a-service product, algorithms code performing robotics and analytics & BI and software code containing interactive insights based on analytics algorithms.
Step 2: Acquire and build
Data as foundation for new products is traditionally captured internally and externally to support daily operations and reporting & insights. Given the vast amounts of data being available from commercial and public sources, extend the purpose of data acquisition for productization. Acquired data needs to be correct, timely, understandable, with a clear provenance — including restrictions for usage & storage and in accordance with regulatory compliance such as privacy laws.
To design and build correct algorithms supporting robotics and/or analytics products, an analytics pipeline needs to be established. In this pipeline correctness, reusability, bias, quality and provenance of algorithms and quality of code will be managed. Integrating CI/CD (continuous integration / continuous development) supports a lean and agile analytics pipeline with fast testing of the prototype value. Data and code need to be stored in an agile, scalable and secured environment. And finally, data & analytics products gain value from the context of their use, user interface and/or ease of use. So, incorporate UX design into the product development approach.
Step 3: Refine and validate
Once data is identified and (algorithm and software) code and user interfaces are designed and build, they need to be enriched, refined and validated.
Step 4: Readiness
Store data in an advanced environment where it can be integrated, queried, processed and searched. This makes data sufficiently, fast and reliable available for data-as-a-service products. Ensure that this is supported by a solid and robust data architecture. Distribution channels of algorithms and software code can be numerous, e.g. in a cloud environment where it can integrate with web- and mobile solutions. Custom made build into client environments. Or through pre-defined (API) connections made to measure for clients.
Step 5: Market and AI feedback
The competitive nature of the information product space, availability of new data sources and demand for timely decision support require an ongoing emphasis on innovation, pricing and monitoring product usage. Adding this step at this stage of the analytics-based data product development process is consistent with the iterative nature of product development in a “lean startup” context. Once again, the evolution of new technologies has provided a mechanism for facilitating a feedback and information extraction process from the marketplace
Brief recap: companies are eager to utilize the new data-oil. Not every organisation is able to do that successfully. By taking a comprehensive approach, persevering through sufficient knowledge building on ALL organisational level and starting small based on a step by step approach, you can be successful with data products and services.
Wim Kees Janssen (Co-founder of Syntho) on: data synthetisation, what it is, what it can be used for and how it adds value to organisations. Wim Kees talks about how synthetic data helps speed up Development, Test, Acceptance and Production (DTAP) cycles by making privacy a non-issue. Listen to hear how Syntho provides the technical solution to root out the need for production data and mitigate possible privacy risks.
Date with D8A
How to boost data availability? Synthetic data is the answer!
In the digital world, there are two main flavours, those with extensive data and those that require extensive data.
– In this article, we leave out the data-native (Big Tech) companies -.
Those with extensive data, are in fact the (international) corporations with trusted brands, mature system landscapes and long long-lasting relationships with customers and partners. They can build upon large quantities of (historical) data, consistently used for existing processes and products. These could do much more with their data, maneuvering (the Gambit) real value out of their data.
Most corporations already invested in structural advantages for a competitive data edge: a supporting platform infrastructure, data quality monitoring, established data science teams and a data steward / data scientist attitude. For a maximal return on those investments, companies need to go the extra mile.
A strategy for data
The most common pitfall of a data strategy is that it becomes an overview of big words only, with a (too!) high focus on technology and analytics. Yet technology should be an enabler. And analytics is just a manifestation. Don’t gamble with data (products), a good data strategy starts with a clear vision, related to market, technology and (regulatory) developments. Include a target operating model to achieve the strategy. But most of all, include on the value of data. Determine use-case types that will create most value. Large corporations have an unparalleled knowledge of industry and markets and are uniquely positioned to oversee this. Of course, there are value-cases for efficiency gains and productivity improvements. Limiting to these obvious values, tends to close doors on new opportunities. Companies must have a clear ambition pathway to data-driven revenue. This new revenue can include rewiring customer interaction, creating a completely new product or business and stepping into new markets.
In practice, data driven revenues proof to be more difficult than imagined. The effort to introduce new products within new markets combined with uncertain results make companies hesitant. Without a solid and funded ambition and a defined risk appetite, this can result into only minimal innovations, such as adding data features (apps!). Compared to data-native companies, this minimal innovation sometimes seems small potatoes. A clear data strategy gives companies mature guidance for innovation KPIs, investments, risks, and market opportunities. The data strategy will help to build success and develop new services, products and even ventures.
Data equals assets
In general, there are two flavours when it comes to data within companies. Companies have less data than they realize. Or companies have more data than they realize and have an under-utilization of the data, due to insufficient awareness of its value. Understanding the value of your data is based on 5 pillars:
Historical data cannot be easily replicated, years of data about customers, productions, operations, financial performance, sales, maintenance, and IP are enormously valuable. Such historical data is beneficial for increasing operational efficiency, building new data products and growing customer intimacy. Although Big Tech companies have been around for some years already, they can not compete with dedicated historical data sets. If the (meta) data is of good quality, the value increases even more. Mapping where this data resides gives an up-to-date overview of relevant data throughout the system landscape.
Corporations are highly aware of the relevance of privacy regulations and have adopted data privacy measures and controls into their data operations. This way, the data that is available is for sure in accordance with (global) data privacy legislation.
Being part of a – traditional – chain with external suppliers and receivers (e.g. supplying materials to a manufacture who sells it to a retailer) can leverage the data into multiple views on e.g. sourcing and warehouse management. Established corporations are uniquely situated to build data-chains. Having a trusted brand creates traction for cooperation and partnerships to capture, integrate, store, refine and offer data & insights to existing and new markets.
“Understanding the value of data means requires real entrepreneurship”
Large corporations can enhance existing & new products with data, e.g., through sensor data. Big Tech companies are doing that now mostly for software products. More traditional companies are particularly capable to do this for hardware products. This way of thinking is still very much underdeveloped, because it is difficult to introduce a new product or even worse, enter a new market with a new product. Yet, it is also the ultimate opportunity! Build data entrepreneurship, by starting small while understanding the full potential of data. Examples of small starts are identifying if a data model can be IP – e.g., when it is part of a larger hardware product. In real life, starting small often means focusing on a solution that is close to home, e.g., joining multiple data sets into one and/or build dashboard, which can be offered to customers as extended service. These are often chosen because of feasibility reasons. From a data product perspective, don’t consider such an approach as not small; consider it as not even starting. Companies that do not progress beyond these products should at least have a simultaneous experimental track, building and failing new products and services for lessons learned what works and what doesn’t. Understanding the value of data requires entrepreneurship (see also the example of Rolls Roycehere.)
Large and established corporations are the epiphany of entrepreneurship. It is at their very core. Yet, often not enough for data. Data can be so alien to them that experimenting for value is hesitant or not happening. And this is where start-up companies are not lacking. They might not have the large historical data sets, trusted data chains or easy connections with available hardware products. They do have the entrepreneurial spirit and are highly aware of the value of data. And have the capability to experiment and become successful with new products.
Becoming data entrepreneurial means knowing which data you have, understanding the (potential) value and daring to look beyond the obvious.
Geneviève Meerburg (Director SME Services at van Spaendonck) on: implementing a data strategy within her organisation. Geneviève shares how the importance and value of data organically grew, leading to a concrete need for a data strategy. Listen to hear how van Spaendonck approached truly living through the principles set out in the data strategy and how it helped create new services for their clients.
Date with D8A
Data strategy for small and medium-sized enterprises
Bart Rentenaar (Enterprise Data Lead at Athora) on: implementing data innovation within his organisation. Bart shares examples of use cases that inspired him to get start with data innovations, the framework that employs to structure initiatives, examples of data innovations he implemented and the team that made that possible. Listen for tips when starting out with the implementation of data innovations.
Arjan Pepping (Corporate Data Manager at MN) on: creating awareness around trusted data and the role of data in control for a pension provider. Listen for the golden tip on implementing data awareness.
Marinka Voorhout (Director at Philips) on: data quality in design is becoming a pre requisite for innovations on data. Listen to practical approach tips and ideas to take data quality into account in user interfaces.
What is data monetization? According to McKinsey, it is the process of using data to increase revenue, which the highest performing and fastest growing companies have adopted and made an important part of their strategy. Internal or direct methods including using data to make measurable business performance improvements and informed decision making. External or direct methods include data sharing to gain beneficial terms or conditions from business partners, information bartering, selling data outright, or offering information products and services (Definition of Data Monetization — IT Glossary | Gartner).
How to deploy a data monetization strategy
Companies that innovate through data monetization recognize this, monetization can be tricky. Get it right, and you have happy customers and users who are willing to pay for your product. But mis-prioritize and your audience numbers quickly drop, along with your revenue. Building data monetization based on the principles of ‘trusted data’ ( mitigates the risk of mis-prioritisations).
There is no clear-cut answer how a data-driven product generates revenue, or when that is appropriate. And there will, of course, be some products that never monetize.
Having a strategy will deliver guidance. A data monetization strategy is, simply put, a plan to generate revenue for data-driven products. Like with any plan, it guides and brings structure. It is not something that is fixed — it should be flexible enough to develop with the product, the market the product exists in and its users. Goals can and will change over time, and so strategies need to evolve to continuously achieve the goals they’re designed to target. Data products can be based on loyalty & subscription models or a on-time purchase model. It is important to understand at the beginning of the strategy which model(s) the data can leverage to create focus and scalable results.
Data monetization strategy must be built upon the following pillars:
* Understanding how data can be converted into value (see below) and the associated opportunities and challenges of data-based value creation;
* Strategic insights into improving and preparing data to support monetization;
* Strategic insights in the potential value, markets and ecosystems.
Opportunities for monetization
Data driven business models help to understand how data can discover new opportunities. This can be focused on value for efficiency (reducing costs and risks), value for legislation (comply with relevant regulations) and value by maximizingprofits, by increasing impact on customers, partnerships and markets. This can include embedding data models, metadata and analytics into products and services. Data monetization needs to be scalable, flexible and user friendly, thereby providing advantages for the company and its customers.
Indirect monetization includes data-drive optimization. This involves analyzing your data to gather insights in opportunities to improve business performance. Analytics can identify how to communicate best with customers and understand customer behavior to drive sales. Analytics can also highlight where and how to save costs, avoid risk and streamline operations and supply chains.
“Having a full understanding of monetization possibilities will help to keep an open mind.”
Direct monetization of data is where things get interesting. It involves selling direct access to data, e.g. to third parties or consumers. This can be in raw form (heavily anonymised due to privacy regulations), aggregated, metadata only or transformed into analysis and insights.
This is the most direct data monetization method. Data is sold directly to customers (or shared with partners for a mutual benefit). The data is e.g., aggregated and/or anonymised, to be fully in accordance with legislation. And to enable trusted data. Buyers mine the data for insights, including combining it with their own data. Or use it for AI solutions within a software. Ecosystem play is the newest area for Data-as-a-service.
This applies analytics to (combined) internal and external data. It focuses on the insights created using data, rather than the data itself. Either the insights are sold directly or provided as e.g. analytics enabled apps.
This is a more flexible type of data monetization. The data ecosystem provides highly versatile, scalable and shareable data and/or analytics, when needed in real-time. Standardized exchanges and federated data management enable using data from any source and any format.
This is the most advanced and exciting way of monetizing data. Analytics-as-a-service seamlessly integrates features such as dashboards, reports and visualization to new and existing applications. This opens up new revenue streams and provides powerful competitive advantage.
Having a full understanding of monetization possibilities will help to keep an open mind. Where many companies are focusing on analytics products & services, there are more opportunities! Always stay within legal & ethical boundaries, but explore all opportunity formats to grasp new markets.