Data - A Raw Material to be Mined

Chairman, Data Governance Council, IBM

Most organizations today still treat data as a raw material to be mined, with industrial processes for staged production. Organizations invest millions in capturing, refining and governing the use of information as an attribute of business activity. These data attributes describe physical products, human relationships, customer preferences, orders, entries, bills and accounts. And maintenance of the attributes are consigned to functional employees with computer science degrees who are rarely if ever consulted on the business strategies surrounding product development, sales and marketing, because data is not business-strategic.

“Physical products and customers are what matter,” one CEO of a large bank told me a few years ago, “we have too much data and we should delete most of it and our problems would be solved.”

I tell you, if this is your view of data and the people who manage it, prepare for obsolescence. The two mega trends today are globalization and Open Communication. We are being swept into the 21st century by a tidal wave of Open Communication from a growing middle class of information producers and consumers who today number almost 2 billion. Open standards are paving the way creating common methods for storing information and delivering its value in applications. Open data is providing new mechanisms for governments and businesses to publish information that can be consumed, aggregated and analyzed for free by anyone. Open APIs are delivering on the promise of business component models, allowing any organization to become their own master contractor for applications developed in the cloud by anyone anywhere, with modular interaction and easy plug and play.

All of this is creating a massive new digital market of free and open information that is destroying brick and mortar businesses, and challenging profit models of almost every kind of corporation. Music and book sellers are closing outlets across the globe. Hollywood is forced to team with ISPs to cut Internet services because of massive file sharing that is reducing movie revenues. Newspapers, magazines and information publishers are finding out how hard it is to compete in markets in which every blogger is a journalist, every photographer an artist. Software companies are challenged to compete with open source applications designed by talented collaborators around the world working in ad hoc teams sharing ideas and code on github.

And amongst this era of creative destruction, one company, Google, has figured out that data attributes that describe human behavior and preferences are worth more than the content that attracts them. Google gives away search results, navigation directions, street maps, satellite views, blogging software and tons more just to learn what you like, where you go and what you read, watch and listen to. This is attribute data, and it’s more valuable than content.

In many organizations I meet, there are growing minorities of CIOs who see the promise of information products and services and want to lead their organizations forward but are held back by a fear of the unknown and a significant lack of skills. Telecommunications carriers want to combine the mobile location data they collect with retail consumer preferences. Many carriers sell handsets in box stores and online retailers, who themselves have rich customer buying histories. I might be walking down Madison Avenue in New York City, passing a coffee shop and a clothing store, with my location awareness on and my preference for advertising opted-in. My mobile operator knows where I am at any given moment because it can triangulate my location between cell towers. Knowing my preference for strong espressos, it puts my location and preference out to bid and several coffee retailers compete to offer me an ad in the OLED display of a city bus as it passes the corner of 82nd Street. Reminded by the ad that I’m caffeine deficient this morning as I search for a morning newspaper, I head into the coffee shop to fill up. But I don’t have cash with me so I use my cell phone with NFC to buy a coffee, muffin and a newspaper, and my carrier tacks on the debit to my monthly bill, or transfers the amount from my bank account.

The carrier isn’t a conduit any longer. They are an information broker, distributor and retailer. Their products are content derivatives – not selling content per se, but the attributes of human consumption of content that are indicative of buying preferences and behavior. These are discrete information products that they package, market and sell to urban professionals like me who want more power from their mobile handsets. They sell me marketing packages that offer me great deals wherever I go, and they package payment services that allow me to move money between my accounts, friends and family by just clicking an icon on my smartphone or bumping my phone with a POS terminal. My carrier has to offer these services because their traditional business of voice and data services has been dramatically undercut by VOIP and global competition.

They needed to diversify their offerings and develop new markets by partnering with a vast array of partners in complex data ecosystems. So they hired an Information Strategist, and built cross-functional teams that develop information products and services, investing in new technologies that work on top of existing data management platforms, like an abstraction layer that federates structured and unstructured information with ontological indexes to facilitate real-time feeds, searches and discoveries. They use high-speed streaming analytics to compare my walking, talking, data browsing and buying habits with the information offerings of thousands of companies worldwide to provide me with nearly instant offers and bids that might lure me to click a link, download a brochure, learn or buy more. And they track my opt-ins and outs each time an offer is made, and use those preferences to build complex data governance rules that are fed into weekly big data batch jobs that assign data classification, storage, retention and deletion rules to data in warehouses and business processes.

Sometimes, the carrier is an information products retailer, selling finished information products to other participants in a large and complex ecosystem. Other times, they are a purchaser of raw data, semi-finished information, and highly refined information products. All these transactions occur behind the scenes in milliseconds, empowered by micro-payments in vast information markets that allow on the fly construction of information products and services which themselves are monitored and mined by others in their own big data clusters.

What I’m describing here is a value-added information products network that is far more science fact than fiction. The capabilities to do these things are here today, but most organizations lack the skills and experience to begin. But every industry confronted with declining revenue resulting from globalization and open data wants these skills and wants these new revenue opportunities.

Your data isn’t an asset you lock up in a vault and protect long past its relevance. It is a product you combine with others, market and sell, buy and trade, to generate new forms of revenue in a digital market that demands an information strategy.