OPEN DATA PROVING HARDER TO MINE
ODX missing investment targets as it struggles to prove value of data
Three years ago, WATERLOO, ONT. then-Treasury Board president Tony Clement announced there was a new gold rush underway in Canada.
The gold — or “new natural resource” — to be mined wasn’t a precious metal, oil reserve or forest. It was government data. Before the digital age, the government’s collection of records about everything from traffic patterns to the weather was stored in banker’s boxes and filing cabinets, inaccessible to the public without an access to information request.
Thanks to spreadsheets and the Internet, it can now be hosted online for anyone to analyze or build a business on. In 2013, consulting firm McKinsey & Co. estimated the global economic value of open data at US$3 trillion.
To help link companies with government stewards of this resource, Clement announced the creation of a public-private partnership, the Canadian Open Data Exchange. Based in Waterloo, Ont., ODX launched in the spring of 2015 with $6 million in funding. Its goal was to incubate 15 new companies, create 370 direct and indirect jobs and attract $50 million in venture capital over its three-year mandate.
“ODX will support collaboration among the private sector, academia, and government to encourage the commercialization of open data, with the end goal of becoming self-sustaining,” Clement said. “It will also support a pan-Canadian open data innovation community that will help incubate the next generation of data-driven companies.”
Two years into that three-year mandate, ODX is on track to reach its goals for creating jobs and companies, but has fallen short of its target for attracting investments for open data companies. Its future — and the long-term fate of government open data initiatives — is uncertain.
ODX managing director Kevin Tuer said the organization has spent more time than he expected raising awareness about the potential of open data among both companies and governments. To convince governments to open up more data, ODX needs success stories and tangible evidence of economic value being created by the initiative — but to get those stories, it needs to convince governments to open up more data.
“The intent, at our launch, was that we would be spending the majority of our time helping companies access and use open data, believing the supply side was in good shape. We were wrong,” Tuer said. “The market for open data in Canada isn’t as far advanced as we thought.”
Renee Sieber, a geography professor at McGill University who uses and studies open data, said the focus on the commercialization is misguided. Much like how scientific breakthroughs with the most economic value often come out of pure research with no explicit commercial goal, she said the best way to help companies make money from open data is to stop worrying about how much money could be made.
“When you have economic development so high on the list, that colours the data sets that are released and how they’re handled,” Sieber said. “In places like the United States, the data is released with the initial goal of transparency and government accountability and democracy.”
But Tony Brijpaul, co-founder of the Waterloo, Ont.-based traffic data company Miovision, has found Canadian governments typically need a more concrete reason than that. Miovision makes sensors that collect traffic data for 13,000 government agencies worldwide and Brijpaul said Canadian clients tend to want evidence of a concrete return on investment.
“If you just go to them and say, ‘Why don’t you open up your data?’ the response is, ‘Why?’ ” Brijpaul said. “It’s really about finding good applications that resonate.”
Peter Johnson, a geography professor at the University of Waterloo who has researched open data, said one reason for such hesitation is fear of bad public relations. A single misplaced decimal in, for example, a data set of public officials’ expenses can cause significant embarrassment.
“All of a sudden you have a $50,000 glass of orange juice. That’s a problem,” Johnson said. He said the way to reduce errors is more digitization, not less: “As businesses and governments move to more automated systems, hopefully the data that’s collected will be collected in an automatic way, rather than needing to do manual input.”
As ODX works to soothe these concerns, it also needs to find a way to make money after its funding runs out. Tuer said he’s considering several potential revenue streams, including charging for its services.
ODX moved into Waterloo innovation centre Communitech’s new data hub on Thursday, where it will work alongside startup and big business clients. Tuer said he’s particularly excited to work with the Canadian Imperial Bank of Commerce, which is interested in tapping ODX to find traffic and demographic data that will help the bank decide where to put its ATMs.
Working with big businesses will be key to reaching ODX’s goal of attracting $50 million in investment for open data companies, Tuer said. “If we get CIBC and others that are more engaged, we can hit that $50-million mark relatively quickly.”
Much is at stake for the companies that rely on government data to deliver products and services, who would find their business models upended if governments declared the initiative a failure and stopped updating their open data portals. Tuer said ODX has identified about 120 such businesses, but believes there are far more.
Startups that have taken advantage of ODX’s help say its services have been invaluable. George Tsintzouras, chief executive of the Waterloo-based startup Alert Labs Inc., which makes a hardware device that measures home water usage and predicts basement flooding, said ODX has been key to the company’s success.
Alert Labs formed a partnership with the City of Guelph through an ODX initiative, with the city offering discounts to residents for installing the company’s datagathering devices. Fewer flooded basements are good for everyone, and new businesses might come up with their own ideas for how to commercialize the water usage data gathered by the devices and made publicly available by the city.
“If I were king, I’d want ODX to be a permanent institution. It’s something that’s been needed for a long time,” Tsintzouras said. “I’m glad we’re not doing this alone.”
When you have economic development so high on the list, that colours the data sets that are released and how they’re handled.