Data is Your Greatest Asset
Your alarm wakes you up. You check the weather to decide what to wear. You load up a recipe on your tablet for breakfast. You check the traffic on your phone or skim the bus timetable. On the commute, you browse articles and load up news reports. You might play music.
Digital activity means data, and that activity is growing. The average person uses 1.7GB of mobile data a month, By 2020, that could be 12GB a month. And the devices by which we access the internet are diversifying. 56% of Australians are ‘digital omnivores’, owning a laptop, smartphone, and tablet. This rapid increase is mirrored in the global data storage. World data storage is set to grow by 10 times from 4.4 zettabytes to 44ZB by 2020.
Life in a data centre shows the same thing. Amazon deploys as much server capacity in a day as the entire company had in 2005. 200 million gigabytes of new data is stored in data centres every day. By 2020, all the world’s available storage will only be able to hold less than 15% of the total generated data.
So what does this mean for companies?
The successful management and utilisation of data can mean a serious benefit to company profit. Financial economist Andrew Lo, Professor of Finance at the MIT Sloan School of Management, says in The Rise of Data Capital that “for most companies, data is their single biggest asset.” Based on a 2011 study by MIT, businesses that emphasise “data-driven decision making” typically performed “5 to 6 percent higher than what would be expected, given their other investments and information technology usage.”
So data is a kind of capital, just like any other kind of capital. Like finance, data is a produced good, not a natural resource, that is necessary for another good or service to be produced. This idea is difficult to grasp since data is intangible, or at least difficult to conceptualise en masse. But consider that data of all kinds, subject to proper analysis, will yield information that will target your consumers better, make your manufacturing processes more efficient, or guide towards more relevant products or services.
The MIT and Oracle Report, The Rise of Data Capital, details two key principles to drive data use:
- Data Comes From Activity
All activities produce information about who’s doing them, the intention, and the results of that action. To capture this data, one needs a sensor. Once the sensor is installed, data can be gathered and stored.
The most pertinent activities for a business to convert into measurement are ones directly related to revenue and expenses. They’ll provide the most immediately effective information. Also, if a company has a unique perspective or competitive advantage, data on that activity is more valuable and should be measured.
- Data Tends to Make More Data
Generating strategies or solutions to problems will mean data now exists about the performance of these strategies, which can then be used to inform and refine those problems. This cyclical use of data results in an acceleration of solution and a competitive advantage. For example, Spotify uses algorithms to build playlists. By comparing the data generated by these playlists, Spotify can further refine how those algorithms perform. Deciding what units to apply this accelerating process to will need some careful analysis.
The rapidly expanding creation of new data combined with the increasing use of data driven decision making means that proper collection and analysis is ever more pertinent. The more data your company collects, the better position you’ll be in to capitalise and create new markets. Data is the next asset – how will you use it?