Last reviewed 19 August 2020
Even the smallest enterprise can now collect masses of data about their customers, suppliers, competitors and market. Here’s how you use that data effectively.
Coined by Clive Humby a British mathematician and one of the core developers of the Tesco Clubcard, ‘data is the new oil’ has become somewhat of a mantra. Every business is now awash with data, collected from several touchpoints. Is the analogy that information is the new oil correct?
It is true that data now powers many of the components modern businesses use daily. And as we move into a new era where AI, automation, machine learning and predictive analytics mature, the information these systems rely upon is critical.
Data, just like oil, needs to be processed before it can be useful. Businesses can collect masses of information but making sense of these vast datasets to reveal actual value to their enterprises is where data analytics come into their own. Data, though, unlike oil, is an infinitely renewable resource. Business can continue to refine how they collect information and also, evolve the tools they use to interrogate these datasets for value.
As business adjusts to the post-COVID-19, data and how this is used to drive tangible positive outcomes will become a core value proposition for all companies no matter their size. Former VP Analyst and Gartner Associate Valerie Logan said: “The prevalence of data and analytics capabilities, including artificial intelligence, requires creators and consumers to ‘speak data’ as a common language.”
This was reiterated by Shiv Malik, head of growth, Streamr – a developer of real-time data apps, who told Business Essentials: “Data is often used to inform hunches and support pre-existing prejudices rather than ruthlessly setting the direction of travel. Of course, when we say data, we are talking about refined insights, or stories. The stories are always there but it takes dedicated data teams to be able to draw those out. It also takes new management to clear out old ways of doing things. Bezoz was able to achieve that at Amazon. Few others have.”
With Ezat Dayeh, senior systems engineer UK and Ireland, Cohesity who help businesses unlock the value in their data explaining: “Over the past decade, we have seen data viewed as both a positive and a negative in terms of its contributions to society. Data has been described as both the new oil, but more recently also the new asbestos. In reality, obviously it is both, what determines the opinion is the relationship someone or an organisation has with it. From our perspective, giving an organisation the ability to do more with its non-mission-critical data has increased the justification to move away from legacy data protection players.”
The relationship businesses have with data is rapidly changing. Gaining customer and commercial partner insights is now critical to sustaining a profitable business. Those companies that can leverage the information they have will effectively define their market sectors.
Croner-i: Business Essentials spoke with Jefferson Lynch, Managing Director of Red Olive and began by asking Is data the new oil?
“In some ways, data like oil is a commodity that has more value when you transform and use it,” Lynch responded. “What makes data valuable are the insights that can be gleaned from examining it or the future products and services that can be developed from understanding specific elements of it, mainly when used to predict future behaviours and needs.
“With the increasing amount of legislation that is being applied in the data space, such as GDPR, there is a limitation which stops people trading data, and in this respect, data is different from oil. Particularly with personal data, there is increasing fear and awareness of how the data can be used and manipulated by those collecting it.
“Only where there is transparency, are individuals happy to grant a specific right of application for a particular purpose to those collecting the data. If this is not apparent, users won’t share data, and therefore there is less intrinsic value.”
The value of information grows exponentially. How can businesses harness this resource?
“Data is like any other business asset. When you start looking at your data, take a step back and ask yourself these questions: What are you trying to achieve as a business? What data and application of data do you need to accomplish this goal? And, what data do you need to understand this?
“By asking these questions, you will start sequencing, and then the data issues become a lot simpler to understand as well as being easier to manage. We always recommend starting with the basics first.
Is information an infinite resource? Or one that needs to be treated as finite?
“Data is not finite and is being created all the time at an exponential rate. Additionally, new services are being developed that create and use this captured data.
“If you consider Uber, for instance, the value in this business would have been in the cars traditionally. Now, it is the insights that can be learnt from the data from the app – and they are a lot more valuable.
“The main challenge for the future of data within a business context is how it can be stored and how easily it can be accessed and used so insights can be explored. Also, it won't be long before every business needs an in-house data expert or an outsourced company to help understand what the vast quantities of data collected are showing.”
Does data become as valuable as oil is today only when value can be extracted?
“Data becomes more interesting when the value you can get from it becomes clearer. As a company, we recommend business-led projects rather than data projects, as for many businesses, it is still early days when it comes to data analysis.
“You can capture data, but if you don't know what you are looking for or what you want the data to tell you, you can be searching in vain, and it can be a costly and painful exercise.
“We know that the most successful data projects are directed by the business strategy where there is a specific need and customers can quickly identify hot spots from our analysis. We see success much quicker as well as being able to locate a 'starting point' that we can work out from.”
Oil ‘belongs’ to the lucky few that have ownership of the right geographical locations. Are the massive data collectors such as social media companies in a similar position? The owner of the most data wins?
“If you are looking at the top 10 largest businesses globally at the moment, the top few are data companies. However, if you are one of the lucky people who can come up with the right proposition to get customers to share their data, even in a smaller, more niche market, you will be ahead of the game.
“The trick is getting the trade-off or exchange right. There is an intrinsic value of collecting data at scale. Larger companies are at an advantage, but there are also huge opportunities for others to join the market. A lot of the work we have done recently is using the data to inform a better customer experience.
“For example, suppose you have an element of a subscription within your business. In that case, there is a considerable amount to learn about how you can use your products and services to get customers to share more information with you. We have seen a lot of success in working with businesses such as Rank Entertainment and The Telegraph Media Group doing just that.”
Are small enterprises, for once, in a strong position, as they can collect highly personal and targeted information to create new personalised product and services for their customers?
“There are lots of niche areas opening up that are too narrow for Google, Facebook and the like. For example, Red Olive works with a range of businesses that work in the property and social housing arena. They are using data and IoT (Internet of Things) to create smart houses and are doing it as a way to offer a duty of care.
“The data flags if there is a potential problem. For example, if there isn't a spike of electricity use in the morning when the housing association would expect it, a member of the family or next of kin can be notified to check in with the resident.
“Sometimes, businesses just want a better end-to-end solution or to use the data as analysis as a means of research to identify and predict future required services. It is not always the amount of data you hold – it is being able to interpret correctly, ensuring that there is an element of trust with customers that it won't be misused.”
Oil is traded on the open market. Will data companies ever ‘trade’ data in the same way?
“We don't think this will happen because of the legislation that is being applied to the industry globally. Also, for some companies, if they misuse, or are seen to misuse the data, the balance of what customers are happy to share will stop, and therefore the value of the business goes down. If you think of the backlash Facebook received with the Cambridge Analytica scandal, for instance, you can see how brands are very keen to keep their reputation intact.”
Data is the new oil to a degree but also differs from that finite resource we extract from the earth. As Gus Tomlinson, general manager Identity Fraud, Europe, GBG, points out, care must be taken when analysing data to ensure true meaning and value are revealed: “Ultimately, with such a vast resource available across the business, organisations will lose key insights if they can’t efficiently and effortlessly coordinate the use of all their data through one layer.
Tomlinson continued: “Advanced technologies, like artificial intelligence and machine learning, are also key to harnessing data as a resource. In the identity and fraud sector, for example, it has the power to significantly reduce instances of ‘false positives’, which both increases the accuracy and efficiency of investigations, and improves incident response times ultimately providing consumers with a better safer online experience.”
And how businesses move forward with the analysis of the data they collect to maintain privacy is the core message from Adam Lee, head of analytics at website optimisation agency, User Conversion: “Society as it currently demands so much more from the owners of data than society did historically for the oil owners (putting other geopolitical battles aside!).
“The global community has become increasingly aware of the power of data, how it can be used for good (for example, the current global sharing of knowledge to support COVID-19 treatment) or how it can be manipulated (as some nation states do to their people). This may be wishful thinking but as a global community we have a responsibility to press upon these data owners that the winners are not simply those who own it and use it to benefit themselves, but increasingly those who use it in a way that betters society.”
In the past, oil has powered business. Today that power is data. We are on the cusp of a data revolution as new advanced analytical tools come to market. Using advanced AI is a core component here, but care must be taken to ensure these tools are used with an awareness of potential bias and, the protection of privacy and personal data. The age of data is upon us. Is your business ready?