Whether or not individual executives at large companies choose to work with open data of various types, the magnitude of the value at stake suggests that some of them will—and that these applications will probably affect a wide range of industries, markets, and customers.
Layering open-data mandates into the ongoing development of data and analytics strategies by considering both the use and sharing of more liquid data should therefore become an increasingly important priority for a wide range of companies. Here are a few examples of open data’s potential:
· Energy exploration. As new technologies have made it possible to drill in a wider range of geological formations, reservoirs have become more complex. That’s raising costs and risks—estimated ratios of prospects to explored targets can be as high as 50 to 1. The sharing of information on drilling permits and on seismic and other data across companies could reduce the number of dry holes and help optimize investments.
· While the widespread sharing of seismic data is unlikely, sharing among even a few companies could produce significant new value in the oil and gas industry.
· Governments keen on maximizing resource wealth could take the lead in structuring processes for granting permits so that grants of initial drilling licenses would require greater sharing of seismic data. Sharing data on projected costs and development timetables (through third parties) could establish benchmarks that, we estimate, would reduce per-project costs by 15 to 25 percent.
· Consumer insights. In the consumer-products sector, sharing data among retailers and manufacturers in limited circumstances—avoiding exchanges with direct competitors, for example—could lead to marketing approaches not possible with proprietary data alone.
· Take Nectar, a UK-based program for loyalty cards, which can be used at Sainsbury’s for groceries, BP stations for gasoline, and Hertz for car rentals. Sharing aggregated data allows the three companies to gain a broader, more complete perspective on consumer behavior, while safeguarding their competitive positions.
· Agriculture. San Francisco–based Climate Corporation combined more than 30 years of weather data, 60 years of data on crop yields, and multiple terabytes of information on soil types—all data from public sources.
· With that reservoir of historical information and real-time data flows, the company offers fee-based advice to farmers and customized crop-and weather-insurance products based on sophisticated algorithms. The company was recently acquired for about $1 billion by Monsanto.
On the flip side, open-data applications may also create new areas of consumer value. In a budding trend known as MyData, organizations share information they have collected about individuals with them, in useful forms. Patients could access targeted medical data from a hospital, for instance, to help them manage their health.
Powerful as open data can be, many companies have valid concerns. Consider the sharing of data to establish industry benchmarks. Even if a company uses a third party and gets assurances of anonymity, there’s always a risk that its identity might be revealed and that competitors could see how well or poorly it was doing. Shared data also could give away sources of competitive advantage or compromise intellectual property. Similarly, tapping social data could heighten privacy worries among consumers.
Still, it’s hard to imagine that the open-data wave will slow down.
Third-party open-data aggregators will certainly proceed to sell and publish corporate data, such as customer ratings, safety records, defect complaints and recalls, and comparative price data. Open-data initiatives also continue to proliferate in the public sector. In June 2013, G8 governments adopted an Open Data Charter, which establishes the expectation that the default policy should be the open publication of government data.
Traditional competitors and entrepreneurial attackers can take advantage of open-data sources such as social-media comments and crowdsourced ideas to come up with new products and services. Open data, in short, seems to be another of the many relentless shifts in the digital landscape to appear unexpectedly, create new opportunities and strategic complexities, and leave established players with no place to hide.