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Barrett’s Briefing: Data Is Money In The Twenty-first Century

by Richard Barrett

The medium is the message. –Marshall McLuhan, 1964

The network is the computer. –John Gage, VP, Sun Microcomputer, circa 1982

The data is the business. –Richard Barrett, 2009

Previously I reviewed some aspects of new business models that are emerging to accommodate new employee-employer relationships.

Business models are also changing in response to many factors. In this post we will explore business models where “the data is the business.”

In these models, the underlying data has become as valuable, or often even more valuable, than the product or service itself. While it sounds a little odd, these examples amply demonstrate the considerable value of the data itself. In some cases the data is the product, but in other cases, the data is ancillary to the service and only over time did the supplier begin to understand the value of the data, and then to package, promote, externalize and even sell the data itself. A few examples:

Package Shipping and Supply Chain Logistics

FedEx pioneered overnight delivery, but quickly discovered that customers really wanted proof of delivery even more than overnight delivery. Proof of delivery (POD) has perennially troubled the shipping industry; the receiver claims the packages have not arrived and the shipper says “Yup, we delivered it”—leaving the sender in the middle with neither the product nor the payment. After being swamped by POD requests, FedEx went online with its package tracking service. Now you can watch your package move through the FedEx system—its location recorded by scanners at each stop in the delivery chain.

Soon after, UPS and the entire shipping industry followed suit. Shipment tracking has become a cornerstone of the supply chain (logistics) management industry, leaving suppliers no place to hide except in their all-to-visible performance.

The Power Grid

Companies producing and delivering electric power have long since mastered the ability to track and measure the performance of their production and distribution systems with SCADA (system control and data acquisition). Now they are installing smart meters which can not only track power consumption minute-by-minute, but can report it back to the company SCADA system through an internet system on the electric power lines. Soon they expect to impose “time-of-day” pricing to capture the value of power demand during peak times.

Solar City, a regional installer of solar power systems in the southwest, offers a performance monitoring service to each of its customers for a small fee. The monitoring service not only tracks system performance, but eventually will have the capability to reconcile power production with credits from the electric company purchasing the power. Solar City charges its customers for this data collection and monitoring service as part of a comprehensive maintenance package. Within a few years Solar City expects the database of solar power production to have significant value to power companies themselves and other agencies interested in tracking aspects of green power.

Tracking Consumer Preferences

Many companies make a business from tracking and measuring consumer preferences. AC Nielsen, now Nielsen Media Research, started tracking the habits of radio listeners back in 1942.

Today Alexa Web Information Service and others track website traffic for millions of websites.

A Tale of Two Databases

Jigsaw Data Corp has harnessed a social network to create its database of business contacts, which Jigsaw then sells to business contact consumers such as marketing departments. With a database of over 12 million contact records (really complete business cards) Jigsaw cannot even begin to keep each contact record up to date much less to continue expanding the database. Instead, Jigsaw has developed a network of over 300,000 contributors, who earn points by adding to the database and updating individual records when a person changes a job, or telephone, or title, or email.

Of course, the mother of all data businesses is Google. Its AdWords business, tiny paid ads displayed in the right-hand column in response to a user’s search words generates well over 90% of Google’s revenue. The AdWords process is amazingly simple. The power comes from harnessing the search-word data and tracking the click-thru performance of each AdWord.

Incorporate Data In Your Business

Does your company collect data in the normal course of business? Of course it does. That data has significant value to the right audience. Consider these questions to make a business out of your business data:

  • What data do you collect from customers, suppliers, partners?
  • How can you develop the data collection into a fee-based service?
  • How would another business use that data?
  • How can you package your data for consumption by others?

As you contemplate selling data you will encounter a host of questions regarding original ownership, distribution rights, payment models, privacy, and protection. But when you have created valuable data, building the data business will provide years of fun, challenge and profit.

Let me know how your team is making a business out of data. Ask your questions here or you can email me directly at rbarrett@one-one.net.

Here’s to your new (data) business,

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