Open Data: Governments and other institutions are making their data freely available. This data plays an important role in maximising the benefits of big data. Open data not only leads to the growth of national resources but also enables third parties to create innovative products and services using datasets such as transportation data, or data about medical treatments and their outcomes, that are generated in the course of providing public services or conducting research.
We use four criteria to define open data:
- Accessible to all.
- Unrestricted rights to use
While Big Data has attracted a lot of interest, Open Data may be more important for new business creation. Some Big Data is anything but open. Customer records held by businesses, for example, are meant to be used exclusively by the companies that collect it to improve their business processes and marketing. Open Data, in contrast, is designed for public use. It is a public good that supports and accelerates businesses across the economy, not just specific companies in specific sectors.
When Big Data is also Open Data, as is the case for much open government data, it is especially powerful
An emerging hypothesis is that the effective use of open data can unlock significant amounts of economic value. For example, in US healthcare, it was found that more than $300 billion a year in value potentially could be created through the use of more open data, e.g., through the analysis of open data to determine which therapies are both medically effective and cost-efficient.
Business and Revenue Models for Data-Driven Companies
Deloitte surveyed a large sample of Open Data companies and identified five business archetypes:
Suppliers publish Open Data that can be easily used;
Aggregators collect Open Data, analyse it, and charge for their insights or make money from the data in other ways;
Developers “design, build, and sell Web-based, tablet, or smart-phone applications” using Open Data as a free resource;
Enrichers are “typically large, established businesses” that use Open Data to “enhance their existing products and services,” for example, by using demographic data to better understand their customers; and
Enablers charge companies to make it easier for them to use Open Data.
A recent McKinsey report has quantified the potential value of open data by examining applications in seven fields of the global economy: education, transportation, consumer products, electricity, oil and gas, health care, and consumer finance (exhibit). For each of these, ways were identified on how open data may create economic value, explored potential barriers to adoption, and considered which actions would be required for capturing value with open data. In fact, there are numerous ways it could drive growth and innovation across industries and sectors. In summary, the use of open data:
- has a large potential economic value from its benefits, including increased efficiency, new products and services, and a consumer surplus (cost savings, convenience, better products)
- enhances big data’s impact by creating transparency, exposing variability, and enabling experimentation; helping companies to segment populations and thus to customise actions directed at them; replacing or supporting human decision making; and spurring innovative business models, products, and services
- creates multiple business opportunities, such as the potential to raise productivity, to improve new products and services, and to enable entirely novel lines of business for both established companies and entrants
- benefits consumers even more than businesses, by creating price and product transparency as well as new channels to provide feedback that improves the quality of goods and services (including public ones)
- entails business risks, including reputational issues related to the potential release of negative information; the potential consumer backlash from aggressive open-data use (for instance, in ads that target online consumers by following social-media activity); and the inadvertent release of confidential information, such as benchmarking data
- requires governments to play a central role by developing and implementing policies to mitigate consumer and business concerns about the misuse of open data and to help set standards that will allow the potential economic and social benefits to materialise
- faces barriers, including privacy concerns and the need for legal and regulatory frameworks