Data is the foundation stone of the digital economy

A policy paper on the UK government’s ‘digital strategy’, launched recently by Karen Bradley MP on behalf of the Department for Culture, Media and Sport, set out a number of measures to be implemented to “unlock the power of data in the UK economy and improve public confidence in its use”. It’s a move that comes as little surprise after the Shakespeare independent review of 2013 revealed that UK public sector data alone holds £6.8 billion in value for citizens and the economy. 

Plans outlined in the data strategy paper include ensuring that, where appropriate, data held by the government is open, accessible, and shared for use by researchers, campaigners, businesses, and entrepreneurs. This will foster innovation and generate economic value through the creation of new digital products and services that enhance people’s lives. The government also intends to continue working with the Open Data Institute and others to create an open environment in which consumer data across a variety of sectors is more widely available through APIs. 

Open data: one giant leap from free data 

Much data is already publically available -- i.e., it is ‘free’ -- which is a good thing, allowing widespread standardisation. But this data is only of limited actual use -- while free, it is usable only under highly restrictive licensing terms. Anyone can access mapping and route data from Google, for instance, but they can’t plug it into their own services without licensing the data from the originator. Building commercial entities on free data is difficult: data needs to be open and reusable for individuals or organisations to capitalise on its inherent value. There are plenty of PDFs of “open” data available, which might match the spirit, but fall short of the intent of open data. 

Money: the tension at the heart of data 

Data costs money to create, and more money to maintain; the Internet is littered with examples of correct-at-the-point-of-capture data sets, gathered by volunteers or companies. These are now only partially complete or accurate because the funds have not been available to maintain them. Monetisation of data is, therefore, crucial, as this generates the funds needed to maintain the data. However, when data starts becoming monetised, openness is often sacrificed. Everyone wants to build their business on open data made available by others, but most reticent to contribute to the pool themselves once they have data of their own that might be usable by others – a ‘tragedy of the commons’. 

There isn’t obvious value, for instance, in the freely-given user data held by social media sites such as Facebook and Twitter, when divorced from advertising opportunities -- which is why attempts to create alternative social networks without this business model (e.g., Ello) have failed. There is no inherent financial value to a user tweeting. There is, however, some concrete financial value to SMS messages or credit card or cheque payments, where the telcos and banks operate as clearing houses, aggregating the value of payments between them and settling the balance. 

Citymapper – the current darling of open data advocates – makes a different trade to monetise its service. It licenses data from TfL, for example, and sells back anonymised, aggregated data about public usage of the network, to be used for service improvements, rather than charging users for the app itself. TfL, for its part, claims to have realised a 58:1 return on its investment in making its data open by reducing journey and wait times for passengers. 

Culture change: making data open by default 

It’s all about ensuring data is seen as infrastructure, not just an asset. Portability of data between systems that is attached to known individual identities -- as in GDS registers and the UK government’s GOV.uk Verify initiative -- will benefit many industries and disrupt many others. House-buying, for example: open data creating opportunities for disruptors to upend the process by building out end-to-end offerings (e.g., Zoopla acquiring Hometrack for valuation data, combining with customer financial data available through new Open Banking regulations to enter mortgage provision, adding insurance/ utilities comparison -- complete home-buying journey covered). Also financial services: improving transparency, relieving customer inertia and facilitating more switching. 

Open data: enabling competition on service quality, not just cost 

For years, mobile network operators have raced to the bottom on price in order to win customers, or bolted on attractive freebies -- service quality is broadly taken for granted, with little differentiation. But quality of service should be the key decision factor, and could be across a range of sectors with open data. Years ago, Etsy was running an internal dashboard showing uptime vs cost-per-TB of data for all its content delivery network providers, and was able to trigger automatic migration between providers should price or reliability change by more than a contractually stated margin. This is model of service-driven automation is extendable, but relies on good data and identifiers. 

Another example: ticketing on public transportation networks. Transitioning from paper tickets (higher ongoing cost of implementation for the network manager; no customer data collected) to, e.g., Oyster (lower cost; some basic data collection re: customer journeys), then to contactless payment cards connected to some form of mobility services account (lower cost; detailed information about customer journeys) has an impact on the type and quality of service the network operator can deliver, as well as on the per-journey price they can charge. It facilitates a shift in hiring focus as the customer service focus moves from selling permits for journeys to assisting customers in making those journeys. This may result in fewer jobs (the source of consternation for the RMT union in London), but they will be of higher quality. 

Service design: creating a culture of releasing data to create value 

A big part of what is constraining customer experience is the protectionist instinct of companies to safeguard existing value chains, in the misguided view that what has generated value in the past and the present will continue to do so in the future. But these value chains have been milked dry. Products and services need to be adaptable to what customers want or need, based on data. 

The likes of Uber and Airbnb are creating sharp spikes in the level of consumer experience that can be achieved, using open data as the foundation. Meanwhile, companies such as Remix -- a US-based public route-planning application that amends routes based on user traffic and address data -- are raising the experience floor, too. Businesses driven by open data are already commercially successful - research by the Open Data Initiative found that the employ 500,000 people and turn over £92 billion in the UK alone – but ultimately this approach could have a significant impact on the public good as well, helping organisations work out what sort of world we collectively want and accelerating the pace of change. 

Gavin Bell, Client Director at EY-Seren
Image Credit: Alexskopje / Shutterstock