Data-New Oil of the Digital Economy

The world’s most valuable resource is no longer oil, but data

21st Century is like Oil in the 18th Century: an immensely, untapped valuable asset. Like oil, for those who see Data’s fundamental value and learn to extract and use it there will be huge rewards.

We’re in a digital economy where data is more valuable than ever. It’s the key to the smooth functionality of everything from the government to local companies. Without it, progress would halt.

Data Infrastructure Should Become a Profit Center

For many companies, their data infrastructure is still a cost center nowadays and should become a profit center by using the data to improve everything, day by day. Companies must begin treating data as an enterprisewide corporate asset while also managing the data locally within business units.This enables sharing of data about products and customers – which provides opportunities to up sell, cross sell, improve customer service and retention rates. By using internal data in combination with external data, there is a huge opportunity for every company in the world to create new products and services across lines of business.

Data Is the New Oil of the Digital Economy

A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.

But there is cause for concern. Internet companies’ control of data gives them enormous power. Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the “data economy” . A new approach is needed.

Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways. It changes the rules for markets and it demands new approaches from regulators. Many a battle will be fought over who should own, and benefit from, data.

The quality of data has changed, too. They are no longer mainly stocks of digital information—databases of names and other well-defined personal data, such as age, sex and income. The new economy is more about analysing rapid real-time flows of often unstructured data: the streams of photos and videos generated by users of social networks, the reams of information produced by commuters on their way to work, the flood of data from hundreds of sensors in a jet engine. From subway trains and wind turbines to toilet seats and toasters—all sorts of devices are becoming sources of data.

The world will bristle with connected sensors, so that people will leave a digital trail wherever they go, even if they are not connected to the internet.

What has changed? Smartphones and the internet have made data abundant, ubiquitous and far more valuable. Whether you are going for a run, watching TV or even just sitting in traffic, virtually every activity creates a digital trace—more raw material for the data distilleries. As devices from watches to cars connect to the internet, the volume is increasing: some estimate that a self-driving car will generate 100 gigabytes per second. Meanwhile, artificial-intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict when a customer is ready to buy, a jet-engine needs servicing or a person is at risk of a disease.

DATA REVOLUTION 

The industrial revolution was driven by fossil fuels, coal gas and above all oil, were becoming highly sought after. Wars were fought, regimes toppled, and thousands of people died, all in the pursuit of a little taste of black gold. Countries like Dubai would barely make an impact on the world, were it not for their vast oil reserves, and throughout the 20th and 21st centuries, oil companies have become most profitable companies in the history of the planet.

However, oil’s period of global domination is coming to an end; data is fast becoming the most sought after resource on the planet, driven by our ever more interconnected society in an age of digital revolution.

“Data is the new oil — and the question is who’s going to own it?” – Jackson Bond, Founder of German Start-Up Relayr

                        RISKY BUSINESS 

However, there are also associated risks with both ventures, data leakage and spillages can have serious repercussions, much like oil spills. We have already seen the global effects of security breaches, the DNC hack caused massive political waves in the United States, Yahoo have had their reputation besmirched time again because of massive security breaches that have come to light, and yet companies still fail to take the risks seriously. But data is far more valuable to a company than oil these days, that is just a power source, there are plenty of renewable options – look at Google going 100% green. Data is power, if you can use and collect the right data you can understand your customer base, track purchasing trends, find out what temperature in a store is most conducive to sales, with the right data almost anything is possible. Every single day, we as a species create 2.5 quintillion bytes of data — 90% of the data in the world today has been created in the last two years alone. Right now most of that data is underused and some even utterly redundant because not everyone has the sufficient analytical power to fully process the data.

However, there is a huge problem with treating data as a natural resource, particularly if we blindly accept that tech giants are the rightful owners.

THE BIG DATA MACHINE

Then there is the other side of this explosion of data, big data analytics and machine learning. It can do so much more for us now than it ever could. Data from every field imaginable is being tried and tested with machine learning, often with spectacular results. Much like oil did in the 20th century, data has the potential to transform our world. Machine learning has proven it can improve medical diagnosis and help detect diseases like cancer with a significantly higher accuracy than human doctors.

Shibu Thankachan, Edamulackal