Exciting big data possibilities – as well as business intelligence and business analytics possibilities -- are all well and good, but what businesses really want is to deliver value from the massive amounts of data they have amassed over time. And most agree that the best way to demonstrate that value is to monetize it. But what exactly does that mean, and how can it be achieved?
These are among the key questions that Professor Barbara Wixom is attempting to address in her current research. Wixom joined MIT Sloan in June 2013 as a Principal Research Scientist for the Center for Information Systems Research (CISR). At a recent MIT IDE/CDB seminar describing her preliminary work, Show Me the Money: Delivering Business Value through Data, Wixom noted that: “In a digital economy, data, and the information it produces, is one of a company's most important assets. Increasingly, companies are monetizing their data assets and generating business value via existing core products and services or new digitized ones.”
For Wixom’s current study, she interviewed more than 50 business leaders involved in data monetization efforts and discovered that definitions of data monetization varied widely – ranging from selling data products and services for revenue generation, to exploiting data internally to drive tangible bottom-line results. When a company explores data monetization with the latter intent in mind, Wixom noted that data providers are good companies to use as role models. Because data monetization is at the core of their business models, data providers have learned over the years how to be really good at monetizing.
Provider, non-Provider Examples
Wixom studied comScore, a 14-year-old marketing research firm “with 14 petabytes of online data, collected real time from around the world.” In a research paper earlier this year, she describes how comScore achieves value creation from big data via three key assets: “A cost-efficient, scalable platform; an analytics-savvy workforce; and a deep understanding of its clients.” She concluded: “Data and analytics providers are highly experienced at working with big data. They create, build, and hone capabilities to exploit their data assets.”
Wixom also discussed the evolution of one her early case studies: medical supply distributor Owens & Minor. Although the company’s core business is distribution, Owens & Minor has a long history of gathering, using and ultimately monetizing its data via its “spend analytics” products and services. Since the 1990’s the distributor has collected information from its supply chain and sold it to suppliers that wanted to increase market penetration and sales – and to customers that wanted to manage cost of patient care. Over the next decade, Owens & Minor won new business and generated revenue as a result of its unique analytics capabilities. In addition to hard-dollar gains, it earned brand and reputational benefits as an early technology leader and consulting partner in the healthcare industry. Nevertheless, Owens & Minor’s analytics offerings now must co-exist and compete with offerings from software vendors, consulting firms and group purchasing organizations, Wixom said.
The bottom line to both the comScore and Owens & Minor stories, according to Wixom is this: Data monetization is not easy. As companies consider selling their data, they need to get into the game with eyes wide open, she adds.