Monetizing data at scale

Many CIOs are being challenged to take on a new role in the enterprise: money spinner. As businesses digitally transform products, services, customer experiences and operations, they’re generating new types and sources of data that, with effort, can be used to create monetizable data-driven products, services and experiences to external customers. Eighty-two percent of respondents to a recent IDC survey reported that data as a service will be required to compete effectively in their industries, and within five years, it will be a critical requirement for competitive advantage.

Not surprisingly, CIOs are often front and center in achieving success with these initiatives. “My job, on top of being the traditional CIO, is now to be the catalyst to teach, learn, educate and encourage risk-taking in this area,” says Justin Kershaw, CIO of Cargill.

But what can we sell?

Modern IT organizations are data factories, with decades of experience in creating and managing data for use in process improvement, supply chain management, business analytics, enhanced decision making and other applications. But for most CIOs, adapting this environment to the demands of data monetization — figuring out whether enterprise data assets have any value for external sale and then turning that data into a high-quality product — is uncharted territory.

Charles Thomas, General Motors’ chief data and analytics officer, suggests that the most lucrative way to make new money using data is to identify industries with an “age-old problem” that a company can solve with unique data. For example, GM’s OnStar data could be valuable to the radio broadcasting industry. “We can tell you exactly what radio station someone’s listening to, how long they listened to it, whether they had it on mute or not, and where they were when they had it on,” he says. These insights open the door for GM to co-develop a solution for advertising attribution. GM’s data could help identify whether someone stopped at a Starbucks shop after hearing a Starbucks ad on the car radio, thus connecting ad spending to revenue produced.

Cargill’s Kershaw says the way to identify valuable data is to talk with top customers “to find out what they might potentially value.” Some of Cargill’s customers are shrimp farmers who buy feed from Cargill. But it can be difficult for shrimp farmers to know the best times for feeding because they can’t see when the underwater shrimp eat. But what if shrimp farmers knew exactly when their shrimp are dining? In fact, shrimp do make sounds as they eat; this sound can be picked up by sensors. In March 2018, Cargill released a data analytics product called iQShrimp. iQShrimp uses sensor data from the shrimp pond to produce a cloud-based dashboard about conditions in a shrimp pond and make recommendations about feeding and harvesting.

Not too fast…

In the rush to get started, it can be tempting to take shortcuts, setting aside the need to establish the tools, processes, architectures and governance that ensures quality, usability and intellectual property management. But this approach greatly increases the risk of creating siloed and brittle products that are difficult to extend, modify and reuse. Data products with a solid foundation of technology platforms, processes, architectures and security will generate revenue, and they also offer opportunities to increase customer loyalty, attract partners and scale.

High on the list of necessities is security. In IDC’s 2017 Data-as-a-service survey, the primary concern for buyers was trust. This means that the IT organization needs to be involved in building not only the size and scale, but also the security to match anticipated customer needs. At the same time, external access to the data service and company systems overall needs to remain secure.

Regulatory compliance is also of primary importance in the race to monetize data. Changes like the European Union’s GDPR and rules regulating the handling of personally identifiable information make data monetization a complex business that requires a close watch on privacy norms and compliance. Even data that seems innocuous can become sensitive when combined with other sources.

Especially in the early days of efforts to monetize an organization’s data, the CIO and IT play an essential role. “The CIO’s responsibility is to provide a safe, secure, scalable environment” for development and operations, says Sakti Kunz, head of data and analytics solutions at Honeywell. The CIO may be leader of the initiative or technology enabler. Either way, IT is essential to ensuring data quality, security and deliverability. 

Martha Rounds is Research Director at IDC.  IDC’s Mitch Betts and Mark Strohlein also contributed to this article.