As the world gets to grips with the importance of data, experts have been scrambling to put a figure on its value to the economy. According to data centre provider Digital Reality, the data economy – defined as the economic value created by the storage, retrieval and analysis of data – was worth £73.3bn to the UK in 2016. In 2017 the World Economic Forum pegged the global data economy at $3trn. On a more granular level, a study by Deloitte assessed that the release of open data by TfL is generating benefits and savings of up to £130m a year.
However, the methodologies informing the studies behind these figures can vary widely. Data is an intangible asset, and the metrics used to value it are subjective. In the corporate world, data leaders have sought to anchor data’s value to a measurable output such as an agreed percentage of a given ROI. In the public sector, data’s benefits are typically illustrated through the lens of cost saving.
But are strict financial measurements the optimal way to assess the positive impact of data? Is data worth more than simple revenue gain? Speaking at the ODI Summit 2021, chief data officer at Lego Orlando Machado and professor of public policy at the University of Cambridge Diane Coyle emphasised that while hard economic figures serve a purpose, the value of data is better illustrated by its use and the culture it can support.
“The value of data is deeper than any monetary figure,” said Machado. “There’s enormous value in having a data literate or data fluent mindset. One of data’s key strengths is learning at speed, and if you have a bias toward using data you can test new tools or products and learn from them, then scale-up the things that work and cut back things that don’t. Each of these has a ‘measurable’ value – which allows for a broader conversation than trying to quantify the value of a specific asset.”
That said, cash remains king in many boardrooms. “Clearly boards need to have a rough idea of economic figures because they have to justify their investments, so I do understand the tactical appeal of big numbers,” said Coyle. “But you have to look at the policy and business choices being made with the support of data to really understand its value.”
Those companies that have adopted a data-biased mindset are already reaping the benefits. “Companies with high levels of data and analytical maturity are typically in the top quartile for performance in their industry sectors,” said Machado. This has been further evidenced within economic research observed by Coyle. “Only a minority of organisations know how to use their data assets well when servicing their customers and making processes more efficient,” she explained. “Economic research shows that in many countries, the top 5% or so of firms are pulling away from the others in terms of productivity and profits because they’re the ones using data.”
A data-biased mindset has to be supported by effective foundations. Indeed, it is becoming increasingly obvious that an effective data infrastructure is an enormously valuable asset in its own right. A recent study by the ODI revealed that up to 8 million GP appointments could be freed up by improvements to data infrastructure in health care. “We need much more thought about national investment in data infrastructure, particularly with regards to increasing high quality data with strict safeguards on who can access it,” said Coyle.
This dynamic is paralleled in the corporate environment. “There’s a much deeper conversation happening now about data enabling factors and the positives they can bring to the business,” said Machado. “Infrastructure, governance and permissions are all key in ensuring that data is used in a correct and responsible way to drive value.”
A vital component of an effective data infrastructure is the capacity to collaborate, and Coyle is a proponent of data sharing. She has monitored the work of competition authorities attempting to democratise access to the large data sets sitting in the hands of dominant international organisations. “Possibilities emerge when practitioners with different ideas and backgrounds can access data and bring in a fresh perspective. There’s a question to be asked about where the boundary between what’s commercially confidential and what should become part of the accessible data environment lies.”
If access to data is to open up and drive value, the role of the individual will grow. Data leaders have professed the need for people to take greater ownership over their own data. In the health context, platforms such as NHS Track and Trace have relied heavily upon self-reported user data. Over 4.6 million people have submitted health reports onto the ZOE Covid Symptom Study app, allowing ZOE and its partners at King’s College to identify loss of sense of smell as a symptom of the virus. A number of companies offer direct financial incentives for user data: you can earn 10p for answering 10 questions on UK-based app CitizenMe. But this area is murky.
Machado previously worked for dunhumby, the company behind the wildly successful Tesco Clubcard scheme. “Clubcard transactions were quite simple,” said Machado. “Users were aware that they were sharing their data with Tesco and that they’d receive relevant offers in return. But we’re at a stage now where people are sharing data with a whole load of online advertisers, making it harder to understand how data is being turned into insight or how generalisations are being made.”
“There seems to be a really difficult trade-off going on between wanting to protect the privacy of individuals and those individuals wanting to get the benefits of combined, accessible data,” said Coyle. This, according to Coyle, is where ethics and governance frameworks become key to value generation. “People shouldn’t be expected to test food for themselves, they expect there to be a regulatory environment that makes it safe for them,” she said. “Institutional frameworks can create that safe environment while ensuring people get a good deal in terms of how their data is used.”
When it comes to approaches to assessing the value of data there is no consensus, but this is true for many areas of the global economy. Coyle explained: “It’s an inherent feature of the economy we’re in, it’s a nightmare for economists. This is true for all intangible assets – the value of a company can plummet to zero just from reputational damage. It’s just the world we live in. The Holy Grail is to find a method that builds enough consensus, but I’m not sure at the moment whether we will get there.”
What is clear is that when robust frameworks support a positive data culture, the potential for growth is enormous. “Try thinking about a clear data ethics framework and data fluency first, then measure what you can along the way. Value will come,” said Machado.
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