The Data Forecast: The Value of Data

COL01 - image for new column - edData is a fascinating thing. We have a sense that this stuff is valuable, but we struggle to put it to use in our organizations — all while technological capabilities continue to become powerful beyond imagination. The most innovative companies are doing unbelievable things: when SpaceX landed an unmanned rocket upright on a barge floating in the ocean, the only logical conclusion I could reach is that we now live in a Marvel Comics movie. If Elon Musk’s chest starts glowing, nobody panic!

Yet, when I think about these achievements—sitting and typing this sentence on a train heading into downtown Chicago—I get a little disappointed. The bar is moving so high, so fast, that I fear many of our existing organizations will simply disappear rather than adapt quickly and remain competitive.

In my home suburb of Chicago, they just tore down the long-shuttered Kmart to make way for a Mariano’s grocery store. The Dominick’s grocery down the street shut down a couple of years ago after succumbing to competitive pressures chain-wide. It sits empty.

These are big businesses getting thrashed by once up-and-comers like Whole Foods and Trader Joes. Grocery stores! Old school, low-margin businesses if there ever were any. If we think data-driven strategy and operational efficiencies are not being leveraged by the new guys, then we are missing everything. If we want our organizations to remain relevant, we must maximize our use of data to get better at what we do best.

Opportunity beckons to deliver the promises of data to our organizations. Consider recent history and where it all goes from here. Look back at pictures from the late 1900’s and you might think, “that’s so cute!” Things were so much simpler then, with our enormous computers and phones with cords. We had predictions about what the future would hold, but overemphasized physical innovations like flying cars over the impact of the Internet and supercomputers in every pocket. We are in the middle of something big, with a front-row seat to watch history repeat itself.

Specifically, the Renaissance.

The original Renaissance was the period between the 14th and 17th centuries regarded as the link between the Middle Ages and Modern History. Right now the “Data Renaissance” is happening. Future generations will consider now as a similar transition period between the adorable technology of the late 1900’s and what we will see happen over the next 20-30 years.

Today we are far beyond where we were, but clearly far from where we are going. Over the last several weeks, the augmented-reality game Pokemon GO! took the world by storm — but the servers are constantly overloaded making it impossible to play. Then, one recent morning, Delta Airlines had a global flight stoppage for several hours due to a fire in Atlanta, and clearly a lack of attention paid to system redundancy and disaster recovery.

We are in the midst of tremendous changes in data and technology. We are transforming from batch to continuous technology availability and reliance. We once had to go sit at a desk to amplify our capabilities with computers, then one day laptops let us work from the couch, and eventually mobile devices allowed for instant-access whenever we wanted it. Evolving rapidly now, Internet of Things (IoT) will have us living in an array of connected devices that are always on, always monitoring—and hopefully—always improving our lives.

Everything is trending smaller, faster, and more connected — to the point that physical hardware endpoints are often being reduced to their pure physical role. From RFID chips, to beacons, to fitness watches: by offloading the complex data processing, networks of cheap, independent sensors can become ubiquitous.

Here in my new TDAN.com column, “The Data Forecast,” we will explore how innovations are changing the world around us, and how data drives so much of it. We will look at cloud technologies, which are upending old paradigms. We will also observe history repeating itself and realize that the fundamental challenges are nothing new; it is simply the context that has changed.[1]

My assumption is that anybody reading this cares about data, and more importantly, how to improve organizations with it. I expect that some pieces will be more technical, and others about more niche topics, but hopefully all worth your time to read and think about. Since this month I’ve spent a good chunk of my space on introducing myself and this column, let’s conclude with an elementary concept: the value of data.

The value of data is simple: it is what a business does with a particular data insight versus what it does without that data insight. If data is not driving meaningful, measurable changes in behavior, then it provides at best no value—and  at worst—negative value.

There are 3 key ways that this value is measured:

  1. Increase Top Line Revenue
  2. Decrease Bottom Line Costs
  3. Mitigate Risk

This is effectively an ROI (return-on-investment) calculation where dollars are not always the unit of measure. It may not necessarily be easily measured, but that does not excuse a failure to conduct at least a qualitative impact assessment. When we deliver data insights or information technology that is informational but drives no change in outcome, the energy exerted in producing it is wasted.

The failure to truly understand the value of data is evident through the interactions of our business and data/technology folks. Typically, the business will ask the data/technology people for something. To gain better understanding, the response is usually a variant of, “What will you do with this?”

That is the wrong question; a one-sided perspective that leads to an inability to gauge value, drive priorities, or have a meaningful collaboration about the design of what is being built. If we consider the value of data as defined above, the real question we should ask is, “If you get this, what will you do differently?”

That one little word, “differently,” changes everything. Now you are directly addressing the value of data! You are having a conversation to predict the impact on revenue, cost, or risk mitigation. Now you can be deliberate in maximizing the impact data has in an organization!

This article is an introduction to these concepts. The value of data and the dynamics of business/technology interactions are complex subjects that we will discuss thoroughly in other articles. Start thinking about how data can drive measurable changes in business decisions and activities in your organization.

And until next time, go make an impact!


 

[1] And if you got the metadata joke in that sentence, this is definitely for you!

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About Anthony Algmin

Anthony J. Algmin was the first Chief Data Officer for the Chicago Transit Agency and is now Chief Data Officer for Uturn Data Solutions, a Chicago-based consultancy that helps companies use data and cloud technologies to get better at what they do best. For more information on OpenGrid or Uturn Data Solutions, contact Anthony at aalgmin@uturndata.com.

  • Richord1

    Remember the old saying in the days when “data” was stored in file cabinets;
    “only 10% of the documents we have in these file cabinets is valuable. The problem is we don’t know which 10%”.
    How do you assess the value of data? Perhaps another saying is appropriate:
    “I’ll know it when I see it”.

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