Data is the big buzzword. Every industry sector is talking about or practicing it and planning to embark on data science. But, what is the underlying value of data? How can data be monetized and most importantly, what is data monetization?
Data Monetization refers to the process of using data to obtain quantifiable economic benefit. Internal or indirect methods include using data to make measurable business performance improvements and inform decisions. External or direct methods include data sharing to gain beneficial terms or conditions from business partners, information bartering, selling data outright (via a data broker or independently), or offering information products and services (for example, including information as a value-added component of an existing offering
Why monetize data?
With only 1 in 12 companies currently monetizing their data to the fullest extent, why
should your organization make the leap today?
- Provides a Competitive Advantage: In mature industries, it’s difficult for businesses to differentiate themselves. Well-executed data monetization strategies can help to gain an edge on competitors who’ve yet to harness the power of their data effectively.
- Creates New Revenue Streams: Even if you aren’t planning to sell your data to a third party, data monetization can still generate new streams of revenue. For example, uncovering new customer trends within your data can precipitate the creation of a brand new product to meet those newly-discovered demands.
- Streamlines Operations: For those of you in the manufacturing industry, in-depth analysis of production data can help to streamline output. Companies get to enjoy the positive byproducts of reduced waste and a drop in unnecessary expenditure.
- Create Strategic Partnerships: Data monetization does not have to be limited to strictly numerical gains. You can offer your data analysis discoveries to interested third parties, such as banks and credit providers, to receive favorable terms in return.
How To Prepare For Data Monetization In 4 steps
Before you can begin to take advantage of data monetization and its benefits, it is essential to prepare your organization.
- Gain buy-in: The drive for data monetization must come from the very top of an organization. Leaders need to grasp that data analytics will not merely serve to save costs; if executed correctly, it can become a source of sizable additional revenue streams. Once this understanding is achieved, leaders need to stress the importance of this data monetization process to key internal stakeholders in order to gain buy-in and achieve the best possible results.
- Assess existing data and determine future collection: An obvious step in preparation for monetizing data is assessing its value. This involves carrying out an audit of the information you collect as an organization and determining which data provides value and which data requires the investment of extra resources to do so. It’s also important to remember that you cannot monetize data that does not exist. Key decision-makers need to ascertain whether there are any potential opportunities for data points that aren’t currently being measured, either within your organization or in your specific industry.
- Decide your audience: Once you have assessed your data for value, it’s time to decide to who you are going to “sell” this data. This audience does not necessarily have to be an outside company. Your audience can actually be critical departments within your own business. For example, data can be used to significantly increase knowledge of consumer behavior. These data points could be crucial for sales departments, leading to increased conversions and customer retention rates. If you are presenting the information to outside organizations, however, consider whether the raw data provides sufficient value to them. In some cases, you may have to carry out your in-house analysis to make the data economically beneficial.
- Establish your objectives: Before you undertake the process of data monetization, it’s essential to come to an agreement on the overarching objectives.Whether this is merely an in-house cost reduction exercise, or you are looking to launch a new data-as-a-service arm to your business, you need to make that distinction before starting the process. This is because it is extremely difficult to pivot your overall data objectives after investing in multiple processes dedicated to one specific purpose.
A framework for data monetization
Once you’ve made the necessary decisions for your data
monetization strategy, you’ll need to establish a process for your company.
Below is a broad framework of steps you’ll need to take to take advantage of
the benefits data monetization can provide.
Collect, centralize, and analyze data
It’s essential to develop a data platform from which you can
gather all the necessary data in one central location. Once centralized into as
few dashboards or interfaces as possible, it becomes much easier to perform
analysis and deliver value to key stakeholders.
It’s best if you build or buy a platform where both internal
and external parties can log in and find what they need as quickly as possible.
This includes granting all parties access to run their own analytics and
identify insights to maximize the value of the information gathered.
Consider these two factors before deciding on a platform
or solution:
Building a platform to meet your data monetization needs may
require considerable investment and expertise.
To keep pace with the increasing size of the datasets and
processing capacity, your solution should be cloud-based.
Choose an operating model
There is no such thing as a one-size-fits-all approach when
it comes to data monetization. The highest-performing companies tend to begin
with internal data monetization first, before progressing to selling data to
third parties.
However, your data might be more valuable to outside
companies than within your own. This distinction will help you choose an
operating model that reflects that choice.
Another consideration is whether your organization
will allow other companies to perform analysis within your platform, or if
you will instead provide third-party companies access only to view your
insights and deductions.
Adhere to governance, compliance and cybersecurity best
practices
Perhaps one of the most crucial steps is making sure data adheres
to strict governance and compliance guidelines. With data requirements becoming
increasingly strict in Europe through its General Data Protection Regulations (GDPR), it is likely that
the rest of the world’s governments will follow suit in tightening up data
legislation.
Additionally, data integrity is a necessity. Whoever utilizes the data must be able to
trust its accuracy and consistency. Businesses will be unable to make
million-dollar decisions based on analysis of data they have even the slightest
reason to doubt.
For very similar reasons,
cybersecurity is an essential consideration throughout your data
monetization process. If you cannot demonstrate that sensitive data is
adequately protected, then it is unlikely that you’ll have the confidence of a
third-party buyer when offering your services. Your information has to be
impenetrable to those that try to gain unauthorized access.
By Calvin David
Calvin is a seasoned business intelligence and management information systems specialist with a career-spanning wide in the banking and telecommunications sectors. He has extensively developed exceptional research skills, business experience interactions, and innovation. Through business engagement and conceptualization he has created advanced core competencies and exceptional skills development in data management. This encompasses data sourcing, storage, exploration, mining, analytics, visualization, and data governance and strategy.