Many industries are awash in data – data that could be worth lots of money, if you only knew how to wring dollars from it. Take the global energy market, which ebbs and flows based on countless variables that until recently could not be tracked and understood. But with the advance of sensor technology, high-speed global networks and advanced analytical algorithms, a company called Genscape is monetizing that data by furnishing energy traders with powerful tools to anticipate market trends as never before.
Genscape pulls information from a network of thousands of wireless devices around the world to track and analyze the flow of energy throughout its supply chain – for example, the volume of oil in pipelines or in storage tanks, the location of power plant outages and even the chemical composition of smokestack. Key to the process are several Microsoft Azure services, including Azure Machine Learning for advanced analytics, reporting and visualization. U.S. and European energy companies rely on the resulting information to make timely market decisions.
The energy industry is far from unique in its use of digital data. Financial services, health care and a host of other industries are sitting on terabytes of potentially valuable data. At the recent 2015 MIT CIO Symposium, Jessica Donohue, chief innovation officer and head of advisory and information services for State Street Global Exchange, explained how her company’s data strategy has evolved.
“We provided clients with risk and liquidity analytics,” Donohue said. “Then we started a new unit with a P&L. We told clients we needed to charge and not give the data away.” Now State Street Global Exchange generates income thanks to value-added services that help clients understand their own data, including the risk in their portfolios.
Although the process of exploring the uncharted territory of monetizing data is different for each company, several best practices emerged from the MIT session. Here are six:
- Establish neutrality and trust. Customers need to know your data is objective and is not offered up to promote a particular agenda.
- Anonymize and aggregate the data. People who are the sources of the data need to remain anonymous. And the data must be aggregated so that it can be analyzed in a statistically valid way.
- Gain permission to use data you don’t own. The last thing your business needs is a costly lawsuit that jeopardizes your clients’ investments – not to mention your business.
- Consider spinning out your data monetization unit. It has its own business mission; autonomy lends credibility and sharpens focus on business goals.
- Provide data analytics in real time. The window for making business decisions is narrowing steadily. But fortunately, the cost of handling large amounts of data is coming down as well. Real-time analytics is becoming the new reality.
- Provide self-service capabilities to customers. Rather than issue reports that might be ignored, engage customers with the tools to enable them to do their own analysis to reach findings that are particularly relevant to them.
As Genscape and State Street Global Exchange have shown, it’s possible to generate new revenue streams and build entirely new businesses from vast amounts of data that are just waiting for the right combination of analysis and initiative.