The concept of data monetization — the act of turning corporate data into currency (either actual dollars or data used as a bartering device or a product or service enhancement) — has been around for the better part of a decade, but it’s still very early days in transforming this concept into a reality, Dell EMC’s Steve Todd, Dell Technologies Fellow, tells IT Trends & Analysis. The power of monetization relies on variety of data sources brought together into a fluid data lake that facilitates data sharing between lines of business.
“We’re seeing a lot of customers that don’t have that data lake strategy.” That’s problem number one, he says. The second big problem is that business executives have not considered business data to have an asset value.
“Everybody is trying to get to data monetization but nobody is thinking about tracking that value.” So the second issue is that “data needs to be treated as a capital asset”.
Also referred to as infonomics, the economics of information, data monetization is predicted to be huge in the not-too-distant future. IDC figures revenue growth from information-based products will double the rest of the product/service portfolio for one third of Fortune 500 companies by the end of this year. Gartner predicts that 10% of organizations will have a highly profitable business unit specifically for productizing and commercializing their information assets by 2020.
However the road to data monetization will be bumpy, as Todd noted. While more than 85% of respondents report that their firms have started programs to create data-driven cultures, only 37% report success so far, with key roadblocks including management understanding, organizational alignment, and general organizational resistance.
The range of ways to do information monetization is endless, says Gartner VP and distinguished analyst Doug Laney, but the first and biggest vision roadblock is a failure to think beyond selling information. Rather than limit the economic potential of your information, he advises businesses to think more broadly about “methods utilized to generate profit,” which can range from indirect methods in which information contributes to some economic gain, or to more direct methods in which information generates an actual revenue stream.
Todd was involved as a collaborator and in joint research on data value and data monetization with EMC and the University of San Diego. Back in 2014 EMC did a Big Data survey with Capgemini that found that 61% of the over 1,000 C-suite and senior decision makers acknowledged that Big Data is now a driver of revenues in its own right and is becoming as valuable to their businesses as their existing products and services.
“The fact that monetization could be equal to products and services was staggering… how can we take advantage of that?” He said the first year of the research with USD was the admission that this data has value but there were no processes in place to evaluate that value, i.e. it is important but it is immature.
Now in its second year, the program has been expanded to include CIOs as the C-level executive most likely to understand and drive the valuation of data, and the processes, technologies and skills required. He says they met with a group of 30 CIOs in October, and the approach was “very well received”.
Todd is on the infrastructure side, but his counterpart, Bill Schmarzo, CTO, Dell EMC Services (aka “Dean of Big Data”), has been focusing on the big picture. Last June he published a detailed blog on Determining the Economic Value of Data, followed by two more related blogs last month: Data is a New Currency and Data and Economics 101.
Schmarzo says while it may be possible to generate revenue through the sale of data and analytics, for most organizations data and analytics as capital get converted into revenue in four ways:
-driving the on-going optimization of key business processes (e.g., reducing fraud by 3% annually, increasing customer retention 2.5% annually);
-reducing exposure to risk through management of security, compliance, regulations, and governance, to avoid security breaches, litigation, fines, theft etc. to build customer trust and loyalty while ensuring business continuity and availability;
-uncovering new revenue opportunities through superior customer, product and operational insights that can identify unmet customer, partner and market needs; and,
-delivering a more compelling, more prescriptive customer experience that both increases customer satisfaction and advocacy, but also increases the organization’s success in recommending new products and services to the highest qualified, highest potential customers and prospects.
Dell EMC — or at least pre-Dell EMC — has been paddling around in the data lake for the last couple of years, both as a user, and as a vendor. The company now has a product to help monetize data, says Todd. In October it shipped Analytics Insight Module (AIM), which combines self-service data analytics with cloud-native application development into a single cloud platform. It is intended to address ‘some of the complexity problems that cause data scientists to spend as much as 80% of their time looking for and massaging information to make it useful.’
The bottom line is that data monetization is real, and it’s happening now. A recent report by Blue Hill Research on four companies who are doing data monetization right found that it ‘makes money for the enterprise, it saves money for the enterprise, or it delivers intangible benefit to the enterprise.’
The other takeaway, advises Toph Whitmore, Principal Analyst, is that achieving success is not easy. ‘As powerful as the enabling data-integration, data-prep, and analytics technologies can be, data monetization can be achieved only when forward-looking business leaders recognize opportunities to derive value from data, and then effectively seize upon them.’
DISCLAIMER: I have Dell EMC (VMware) stock in my portfolio.