Mea­sur­ing the ‘value’ of Big Data

To suc­ceed in the In­for­ma­tion Econ­omy, an or­gan­i­sa­tion must place data at the heart of ev­ery­thing that they do, ev­ery day

PCQuest - - CONTENTS - Amit Me­hta, Coun­try Man­ager, Isilon Stor­age Divi­sion at EMC In­dia & SAARC

With data grow­ing at ex­po­nen­tial rates, it is highly prob­a­ble that by 2024, we’ll have a fully es­tab­lished In­for­ma­tion Econ­omy where data is crit­i­cal to busi­nesses look­ing to pre­dic­tively spot new op­por­tu­ni­ties to gain a com­pet­i­tive edge. Ow­ing to that, stan­dards-based in­for­ma­tion will be sold, do­nated and traded on open ex­changes. Data mar­ket­places will fa­cil­i­tate the trans­fer of data in and out of siloes more flu­idly and peo­ple will start to bro­ker their own data. We’re al­ready see­ing many signs of this – but it only seems to be the be­gin­ning.

It is quite ob­vi­ous that a com­pany’s data is very im­por­tant es­pe­cially in the global land­scape that busi­nesses are op­er­at­ing in to­day. The big­ger ques­tion though is how to mea­sure its value.

Now the time has come to talk about ‘data as the new cur­rency’. Typ­i­cally, data is worth what some­one is will­ing to pay for it. That sim­ple trans­ac­tional view does not tell the whole story. As or­gan­i­sa­tions race to make sense of the op­por­tu­ni­ties and prob­lems as­so­ci­ated with our in­creas­ing data driven world, busi­nesses are cop­ing with the need to more ac­cu­rately mea­sure its true value.

But have no fear - it’s not all doom and gloom. Savvy busi­nesses will take note and pre­pare for the fu­ture by ‘ar­chi­tect­ing for value’ – un­der­stand­ing and cre­at­ing busi­ness and IT val­u­a­tion pro­cesses within the com­pany that re­veals the real value of data. Here are some ex­am­ples of new data val­u­a­tion ac­tiv­i­ties be­ing un­der­taken by or­gan­i­sa­tions to­day.

Data Be­comes A New Prod­uct

A re­cent re­port on Big Data’s mar­ket dis­rup­tion by Capgem­ini and EMC found that 63 per cent of re­spon­dents con­sider that the mon­eti­sa­tion of data could even­tu­ally be­come as valu­able to their or­gan­i­sa­tions as their ex­ist­ing prod­ucts and ser­vices. This speaks vol­umes about Big Data’s po­ten­tial - com­pa­nies that have long sold prod­ucts for rev­enue may start gen­er­at­ing more rev­enue from data value than prod­uct value. French ten­nis racket man­u­fac­turer Babo­lat makes a ‘smart racket,’ the Babo­lat Play, which gen­er­ates and col­lects data about a player’s per­for­mance on the court. By cre­at­ing a smart prod­uct, Babo­lat took the first step to the data value. This data could be­come an en­tirely new rev­enue stream. Babo­lat might, for in­stance, sell this data to app de­vel­op­ers look­ing to make new prod­ucts and user ex­pe­ri­ences or sell the data to ath­letic re­search or­gan­i­sa­tions for data min­ing. A ten­nis racket can only be sold once, but the data it pro­duces has end­less mon­eti­sa­tion po­ten­tial.

Data Val­u­a­tion for the Worst Case Sce­nario

Large-scale cy­ber-breaches are be­com­ing far too fre­quent, re­sult­ing in the great fi­nan­cial loss for mul­ti­ple com­pa­nies. As a re­sult, data in­sur­ance poli­cies are be­com­ing a nec­es­sary part of do­ing busi­ness. Work­ing with the in­sured, data in­sur­ance com­pa­nies have to place value on a data set that not only looks at the value of the data to the in­sured’s busi­ness but also takes into ac­count the mul­ti­tude of other fac­tors that hap­pen in the event of a data breach. Cus­tomer no­ti­fi­ca­tions, repa­ra­tions and other costs such as PR for dam­age con­trol all must be fac­tored into the price of in­sur­ance. AIG’s Cy­berEdge, ACE’s Pri­vacy and Net­work Se­cu­rity, and Lock­ton’s Cy­ber & Tech­nol­ogy divi­sion of­fer com­pa­nies cov­er­ages in the event of a breach that fac­tor in the nu­anced ef­fects of a data breach.

Data in a Dig­i­tal Bank­ruptcy

Cae­sars En­ter­tain­ment Op­er­at­ing Co., which con­trols Cae­sars Palace, Cae­sars At­lantic City, Har­rah’s Reno and more than a dozen re­gional prop­er­ties, filed for bank­ruptcy ear­lier this year. In­ter­est­ingly, the most valu­able in­di­vid­ual as­set that cred­i­tors are vy­ing for is

“63 per cent of re­spon­dents con­sider that the mon­eti­sa­tion of data could even­tu­ally be­come as valu­able to their or­gan­i­sa­tions as their ex­ist­ing prod­ucts and ser­vices.”

Cae­sar’s To­tal Re­wards Loy­alty Pro­gram, the com­pany’s big- data cus­tomer loy­alty pro­gram that it has been built over the last 17 years and is said to have data on more than 45 mil­lion cus­tomers. This data is val­ued by cred­i­tors at $1 bil­lion – that’s a fairly large num­ber. It ex­ceeds the value of any of Cae­sar’s phys­i­cal Las Ve­gas prop­er­ties, which re­ally puts the value of data in per­spec­tive. The pro­gram is also said to be 17 per cent of the to­tal value of all Cae­sar’s op­er­at­ing as­sets. Since the gam­ing in­dus­try does not have agreed upon val­u­a­tion poli­cies and prac­tices for data, the value of the To­tal Re­wards Loy­alty Pro­gram will be con­tested in court and could re­sult in in­ter­est­ing rul­ings around data val­u­a­tion.

Data Deals: Merg­ers and Ac­qui­si­tions

Data is now one of the pri­mary as­sets com­pa­nies are af­ter in an M&A, in some cases more so than the peo­ple, IP, or real es­tate. In LinkedIn’s re­cent ac­qui­si­tion of, data was likely the big­gest as­set to come along with the ac­qui­si­tion price. LinkedIn’s CEO Jeff Weiner made note of’s ex­ten­sive li­brary of pre­mium video as a com­pelling rea­son to buy the com­pany, mean­ing that LinkedIn was af­ter’s data as­sets to aug­ment its pro­fes­sional net­work. Out of the $1.5 bil­lion, it’s likely that a sig­nif­i­cant por­tion went to­ward the pur­chase of video data as­sets.

In­for­ma­tion Econ­omy for a Bet­ter World

The Can­cer Genome At­las ( TCGA) aims to de­velop phar­ma­ceu­ti­cal and di­ag­nos­tic tar­gets in can­cer by mak­ing it easy to share ge­netic data. This col­lab­o­ra­tion of NCI and Na­tional Hu­man Genome Re­search In­sti­tute in essence looks to code ge­nomic data so that stan­dards-based, com­mon data el­e­ments can be shared through open-source in­fra­struc­ture.

To suc­ceed in the In­for­ma­tion Econ­omy, an or­gan­i­sa­tion must place data at the heart of ev­ery­thing that they do, ev­ery day. Busi­nesses have to pri­ori­tise data val­u­a­tion for tech­ni­cal and busi­ness- driven con­tent through­out the or­gan­i­sa­tion. They must make it a part of their busi­ness strat­egy by de­vel­op­ing tools for val­u­a­tion and poli­cies and ser­vices to ac­quire or sell data. In or­der to leap ahead in this new world, com­pa­nies must re­main fo­cused on hon­ing their abil­ity to achieve data- driven in­sights by pre­dic­tively spot­ting new op­por­tu­ni­ties.

Some start-ups and tra­di­tional or­gan­i­sa­tions are al­ready mak­ing head­way in this arena. For oth­ers, it’s not too late. But as the In­for­ma­tion Econ­omy takes shape in the years ahead, those that move too slowly will not sur­vive. The race is on – don’t be left be­hind.

Amit Me­hta Coun­try Man­ager, Isilon Stor­age Divi­sion at EMC In­dia & SAARC

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