Ask just about any company what their most important asset is and they’ll tell you people and/or information. Today, information as an asset is probably more important than ever before and could, when properly recognized, managed and turned into knowledge, or even just raw, provide entirely new revenue streams for a business. Monetized, information and even raw data, could also double or triple a company’ valuation.
For a business to think of its information or raw data as a monetizable asset and to just treat information as an asset is a paradigm shift in thinking. Business sees revenues as strictly coming from the products they produce or the services they deliver. It is an understood transaction that is tangible in that it is surrounded by accounting principles that the business, accountants, financial markets and governments agree upon, for most, this is the Generally Accepted Accounting Principles, GAAP.
The Economist, Wired Magazine and others have all proclaimed that data is the new oil. But only a few really understand what this means and those that do, are making a fortune. Yet that is only a fraction of the new revenue opportunities available through information, data and knowledge.
For the most part, we tend to think of information that is sold as consumer data from credit cards or market data from types of products and services sold. Credit reporting and monitoring agencies have been selling information for decades, so have mailing list companies and research houses. That is one form of how information can be monetized, there are even more ways and opportunities.
Take for instance, the raw data from HVAC equipment (the air management systems in buildings that provide heat, air conditioning and ventilation.) A few years ago I was approached by an elevator manufacturer that wanted raw HVAC data. They wanted it from 300 buildings over 15 stories high across the U.S. and Canada. There was a lot of puzzlement by the HVAC companies when I approached them. In the end, we did source the data. Why did the elevator company want it? They didn’t reveal the why, but as elevators push and pull a lot of air up a shaft, I suspect they wanted it to make a better, more energy efficient elevator. For the HVAC manufacturers, they are now able to place a quantifiable value on the raw data their equipment produces because they sold it for a monetary value. That raw data had become a product.
Data is the new oil, yet few organisations understand how to extract it and refine it into a revenue opportunity.
Even if you’re a small to medium sized business, you generate information, especially if you’re in a knowledge-based business such as biotech, renewable energy, engineering, architecture, sciences, software etc. Usually, these businesses t best, manage their information to become knowledge that they use to create and deliver products and services and that’s the end.
But the data, information and knowledge a business creates, can be packaged in other ways to produce additional and new revenue streams. A biotech or nanotech company for instance, creates valuable knowledge over time that could be of immense help to another company that needs some of their knowledge to create a new product or service. The biotech company suddenly has a new revenue stream opportunity.
What few businesses also rarely recognize is that they often generate what is called “exhaust data” that is, data that is generated alongside the data they need purely as a result of the process of data collection. For them, that exhaust data seemingly has no value because they can’t use it. As the old saying goes however, one man’s trash is another man’s gold.
To monetize data, information and knowledge however, takes time and understanding and buy-in at an executive level. It also means that as a business, the organization has to have good information management and knowledge management in place. If you don’t have a detailed grasp on what information you have, you can’t develop a product. An effective model for this is called DIKAR (Data, Information, Knowledge, Action, Results.) This is a model focused on helping an organisation get the right information to the right person at the right time to make the right decision.
DIKAR is an exceptional model to help a business become more intelligent and realize the value of its information within and for the existing business model and to grow the company. With a few tweaks, it can also be leveraged to help an organisation find new revenue opportunities, from monetizing information to identifying new products, services and vertical markets.
To get there a business must do three things; 1) treat information as an asset, 2) manage its information and knowledge and 3) accept and be open to finding new revenue opportunities from data and information. It sounds both simple and complex, but the biggest challenge is the mindset to take this step. From my experience, organizations that see this have those “a-ha” moments that spark the innovative mind in the executive.
The field of monetizing data is called Infonomics as coined by Gartner Research VP and Fellow, Douglas Laney who quite literally wrote the book on it.
So, it’s time to treat your corporate information as a true asset. After all, data is the new oil. You just have to know how to efficiently extract it and bring it to market.