Companies Are Preparing to Monetize Their Data, Says EIU Report

The Economist Intelligence Unit published a report, The Business of Data, on Jan. 12, 2016 that claims companies are actively preparing to monetize their data. Sponsored by NTT Communications, a Tokyo, Japan-based telecommunication services company, "The EIU report examines how companies are positioning themselves to benefit directly from the wave of opportunities offered by fast-evolving data technologies. It is based on a cross-industry survey of 476 executives based largely in North America, Europe and Asia on their companies' data plans and practices, as well as insights from the leaders of organizations at the forefront of the emerging data industry."

The report's Executive Summary presents the following key findings:

• More companies want to profit from their data. While many companies have been gathering data for a long time, a greater proportion of them are now preparing to monetize it. Regardless of geography, sector or annual revenues, our survey makes it clear that most companies now perceive data as a strategic resource. Almost 60% of survey respondents say their organisations are already generating revenue from the data they own and will continue to do so, with the rate slightly higher in Asia (63%) than in North America and Europe (58% and 56%, respectively);
• Investment in new technologies will grow. The survey shows that big data has had a major impact on the operational structure of businesses, with 43% of survey respondents saying it has prompted them to use new technologies. This finding is consistent with other research, which shows companies significantly boosting investment in big data solutions and services such as cloud storage, data centers, and security. IDC, a technology research firm, estimates that this market will grow at a compound annual rate of 23% through 2019 to reach almost US$50bn;
• Data is becoming vital to decision-making. A large majority (83%) of those polled say that their firms have used data to make existing products or services more profitable, and over two-thirds (69%) feel that there is a case for starting a new business unit dedicated to developing data-related products or services. Data is increasingly being seen as the raw material that supports and informs a company’s efforts to meet key performance indicators and the expectations of its customers; and
• Consumer privacy and data security remain concerns. Safeguarding customer privacy remains a key concern as companies seek to profit more from their data. On the positive side, 86% of survey respondents say that their customers trust them with their personal data, and 82% insist their firms are selective in gathering, storing and analyzing customer data. However, only 34% of executives say that their firms are "very effective" at being transparent with customers about how they use their data and 9% admit to being "somewhat" or "totally ineffective," indicating regulators will remain vigilant in this area.

Naka Kondo, the editor of the report, said in EIU's press release:

Differences have emerged in the way companies, regulators and individuals are preparing for a world where data are increasingly seen as a commodity in their own right. The data literacy of individuals and of regulators will be crucial in defining the value, risk and benefits of data. Data considerations should be of prime strategic importance in the next three years, especially for companies looking to capture future opportunities in an expanding and changing market.

I agree with the report's conclusion that "the brave new world of big data is here to stay" and "many companies are poised to gather, analyze, use and trade in a larger and more diverse array of data in the years ahead regardless of regulatory or security complexities."

What are the strategies that allow companies to navigate this rapidly changing landscape and succeed at the business of data?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.