Rising potential of open data analytics
Open data or information that is available to others without any cost, has already generated a great deal of excitement around the world for its potential to empower businesses and citizens, change the way government works, and improve the delivery of services. According to a new McKinsey report, the potential for open data is tremendous as it can not only create significant economic value, but can also generate more than $3 trillion a year.
According to the study, the Even though the open-data phenomenon is in its early days, we see a clear potential to unlock significant economic value by applying advanced analytics to both open and proprietary knowledge. In some of the key enterprise verticals, it can help companies to define new products and services, and improve operational efficiency and effectiveness.
James Manyika, Director of the McKinsey Global Institute and his team of researchers found out that Open data can become an instrument for breaking down information gaps across industries, allowing companies to share benchmarks and spread best practices that raise productivity. Blended with proprietary data sets, it can propel innovation and help organizations replace traditional and intuitive decision-making approaches with data-driven ones.
The main area of interest will be open-data analytics that can allow companies to improve new products and to detect anomalies and needless variations. This in tuen can lead to leaner, more reliable processes.
Technology and talent
However, Manyika and team points out that to leverage open data effectively, adequate technology and expertise is required to use the. And there is much work to be done by governments, companies, and consumers to craft policies that protect privacy and intellectual property, as well as establish standards to speed the flow of data that is not only open but liquid. After all, consumers have serious privacy concerns, and companies are reluctant to share proprietary information—even when anonymity is assured—for fear of losing competitive advantage.
The McKinsey research examined the potential of open data in domains such education, transportation, consumer products, electricity, oil and gas, healthcare, and finance. Here are some of the key observations made on open data and its benefits, challenges and growth potential.
- Enhances big data’s impact: By creating transparency, exposing variability, and enabling experimentation, companies can segment populations and in turn customize actions directed at them. It has the potential to replace or support human decision making; and spur innovative business models, products, and services
- Create multiple business opportunities: It has the potential to raise productivity, to improve new products and services, and to enable entirely novel lines of business for both established companies and entrants. It can create price and product transparency as well as new channels to provide feedback that improves the quality of goods and services (including public ones).
- Entails business risks: It may include reputational issues related to the potential release of negative information; the potential consumer backlash from aggressive open-data use (for instance, in ads that target online consumers by following social-media activity); and the inadvertent release of confidential information, such as benchmarking data
- Governments to play a central role: The government can develop and implement policies to mitigate consumer and business concerns about the misuse of open data and help set standards that will allow the potential economic and social benefits to examine privacy concerns and the need for legal and regulatory frameworks.
According to McKinsey researchers, the benefits of open data can be self-reinforcing and its importance will keep increasing. However, Manyika and his team observes that this cycle can gather momentum only if private industry and public agencies cultivate a vibrant open-data ecosystem and implement policies to protect stakeholders. In other words, companies should put in place the technologies and talent to collect and analyze data.
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