Data Monetization: New oil of the digital world

Multi-billion dollar acquisitions of companies with relatively small revenue are quite common these days. What might be the strategy behind such acquisitions? The real value of these small companies' lies in its vast user base, which, if leveraged effectively can lead to efficient monetization.

With the capability to track most of its user interactions across all the available channels and devices, leading organizations have a big treasure of data. Though gathering, cleaning and analyzing data has been ingrained in the genes of everyday business, many organizations are struggling to turn this asset into a new revenue stream by using insights to better understand consumer behavior and emerging trends. This new avenue of unearthing value from the huge chunk of data (data monetization) is beyond the lines of the conventional business, and requires organizations to take advantage of distinct sets of data and advanced analytical techniques.

This article throws light on how organizations can practice data monetization more effectively by identifying its challenges and adopting the right strategy.

Avenues of data monetization

Today, we are witnessing a growth in smart and connected devices, such as phones, cars, wearables etc. Also, the nature of business is changing with new expectations, new channels, opportunities, and threats. In the need for faster time-to-market with optimal quality, organizations are optimizing their services or products by making use of insights from market interactions.

There are multiple areas for monetizing data across industries, which can be leveraged to gain competitive advantage. Let's look at some industry use cases:

Telecom companies can use data monetization for managed security services to predict trends in cybersecurity. This can be sold to other organizations.

Data can be used by insurance firms in the mobility area. They can dynamically charge premiums by monitoring vehicle drivers' performance using telematics.

Data can also be useful in the case of smart cities and autonomous vehicles where customers can be charged based on services, entertainment etc.

Data monetization will be useful for payments companies to help the retail industry understand consumer behavior. As per Forbes research report mobile payment will total up to about $500 Billion in India itself by 2020¹.

Data can help logistics to streamline the supply chain by analyzing the optimal patterns of distribution.

Another area of new opportunity for monetizing through data is healthcare, where personalization with wearables devices has become a big thing. Also, hospitals are directly using data to bring down waiting times. Healthcare companies are directly selling data to equipment manufacturers to optimize their process and products.

Key challenges of data monetization

Organizations that are implementing analytics programs to carry out data monetization face four critical challenges:

1. Low usage of advanced analytics across businesses -Most of the analytics revolves around creating use cases and enhancing the performance rather than building different lines of business. There is a need to scale up analytics to make it the core part of an organization's business model. To make this happen business focus, ownership and accountability are essential.
2. Reskilling and hiring the right talent has become difficult -To enable data monetization, organizations need to build the right kind of ecosystem to develop, hire and retain the right talent.
3. Adherence to legal and compliance policies -Monetizing data will require organizations to properly understand the privacy and legal compliance policies from the beginning and add them in the design principles of products and services. To develop an expertise, they need to involve compliance and risk experts to provide necessary knowledge and capabilities.
4. Reimagination of organizational structures is required -Due to advancement in technologies such as artificial intelligence and machine learning, there is a need for evolution of roles, responsibility, and metrics across the organizations. For this proper change management programs need to be carried out.

Data monetization strategy

The strategy and framework for data monetization will constantly evolve, but consistent commitment to win through advanced data analytics and innovation across the value chain is important. To lay down a successful data monetization strategy, organizations should begin by:

• Defining the use cases and the hypothesis for the existing data sets
• Developing a dynamic process plan
• Ensuring the involvement of key stakeholders
• Referring non-traditional data sources to enhance current use cases

In parallel to this, organizations should internally brainstorm these assessment questions:

• Are we creating competitive advantage by utilizing our data assets?
• Do we already have in place the appropriate data monetization strategy to evaluate the defined use cases?
• Do we need to wait endlessly for the complete data or can we have a strategy to start deducing insights and inferences from whatever data is available and build on as data increases ?

Towards a digital future

Data monetization is the next frontier in the world of digital transformation. The success of the data monetization strategy depends on the effectiveness of execution. Without the right level of execution, commitment of leadership, the culture, and the overall ecosystem, success will be compromised. Organizations may choose to monetize the data with any approach but utmost commitment from the key stakeholders from every management function is important. It has been seen that data monetization projects with realistic targets deliver the greatest ROI.

Reference

1. https://www.forbes.com/sites/suparnadutt/2016/08/18/this-startup-is-connecting-indians-to-credit-and-taking-the-country-cashless/#724944192c61