Just over a year ago Wired magazine proclaimed data is the new oil. Just a few weeks ago The Economist magazine reinforced this statement. It’s true. But few understand what this actually means. So let’s unpack what is meant by data as the new oil, where we are and where we need to go.
Old School Data Brokerage
When most people think of buying and selling data, they tend to think of email lists or financial data such as consumer spending habits. These types of data have been traded for decades and it’s a multi-billion dollar industry. But that’s the tip of the iceberg and it’s the old school of data brokering.
All The Other Data
As most readers will know, just about anything and everything is collecting data these days. From drones and satellites to sensors in home thermostats, cars and manufacturing equipment. Anything in the Internet-of-Things (IoT) and Industrial-Internet-of-Things (IIoT) world collects some type of data. For the most part, the creator of the device collects the data for themselves. To improve their product or provide the data in a cleaned format for the user of the product.
Why Different Types of Data Are Valuable
A business intelligence analyst will ingest a variety of data sources to arrive at insights that can help their company find a competitive edge or new opportunity, as one example. For Big Data projects, it is the variety of data that makes the most value to gain insights. As analytics tools advance and more companies adopt Big Data analytics, more and more types of data will be needed. For instance, we recently in-licensed HVAC data for an elevator manufacturer running a Big Data project. They used all kinds of data including HVAC, weather and traffic signal data.
Setting a Value on Data | Infonomics
Right now, there really isn’t a standard methodology for placing a value on different types of data. For email marketing lists, this is fairly easy because there is a history. But what about SCADA data from a robot on a plant floor that makes brakes for cars?
This nascent area of data valuation or placing economic value to data is called “infonomics.” There are many variables that come into play. The primary being that you can’t “buy” or “sell” data sets. You can only in or out license them. Some data expires quickly, some increases in value. The value of the data is relevant to time, place, volume and need. The in-licensor (buyer) of data also doesn’t really care about the data they care about the derivative.
Why Data is the New Oil
As more and more companies need varieties of data to run analytics on for insights, they will look for ways to get that data. This may be through data for data trades, short and long term licensing (such as subscription) or even buying a company for the data it produces; this is why Microsoft bought LinkedIn and IBM bought the Weather Network. They want the data. Microsoft bought LinkedIn for $26 Billion on revenues of $3.2 Billion.
Data is the new oil because it drives product development, competitive insights, mergers and acquisitions, product development and more. It’s why we started DataTradr and it’s an exciting time.
What do you think?