There’s no single answer on how to extract value from your data. We talk you through the process of choosing the right monetization strategy for your organization.
Richard Carberry, Principal Consultant at Agile Solutions, shares his insight into monetizing data with the right data, the right vision, and the right agile solutions.
How do you extract value from your data? It’s the million-dollar question, but answering it is like trying to solve the age-old adage, ‘how long is a piece of string?’
Well, whose string is it? What’s it made of? Most importantly: what do they want to use it for? And how might that use change over time?
The truth is, no one can tell you how to extract value from data without first understanding what that data is, who is using it, and identifying what they want to use it for – their ‘data vision’ – both right now and in the future.
How to decide your vision for data monetization
The first step towards any successful data monetization strategy is understanding what ‘data monetization’ could or should look like for your organization.
What is your data vision? Or more accurately, what is your business vision? If you want your data monetization strategy to be a success, these two must go hand in hand. A data strategy at odds with organizational goals is always doomed to fail.
The purpose of data is to influence, support and drive business goals, so start with your goal and work backwards. If you want to unearth new market share by targeting a new audience, then how does data support that? What does your data need to do to get you there? What technology do you need to make that idea a reality?
With a clear vision at the outset, you are much more likely to be able to: choose the right management strategies; select and/or develop the right technology; be able to communicate that vision to your employees, stakeholders and solutions providers; and get the results you want at the end of the project (ie, money from data).
What are the different methods of monetizing data?
While there are myriad ways to commercialize your data, they can be grouped into two approaches: data-based optimization and data-driven business models.
Data-based optimization is the use of data analysis and insights to optimize your business performance: reducing spend, avoiding risk, streamlining operations and/or driving sales. For instance, you could use supply chain data to identify and remove unnecessary costs, or customer data to target sales and marketing activity successfully.
Data driven optimization uses your data to identify new opportunities, customers and, ultimately, revenue. This is less ‘closing the gaps’ with data, and more ‘opening new doors and possibilities’. It gives organizations a way to truly differentiate with data, whether that’s developing new internal processes or new customer-facing actions. The result: a direct link between data and increased revenue.
How to create a data monetization strategy
So how do you make that vision a reality? There are four things that any data monetization strategy needs:
- The right quality data
You have data, but is it what you need? Good quality data is at the heart of any data strategy – not just monetization – which means ensuring that the data fuelling your project is accurate, reliable, up to date, complete, and relevant. Data management should be built into the early stages of any data monetization strategy to account for this.
- A strategy that connects people and data
If there is a disconnect between your data strategy and the people using data within your business, it will hold back progress, impacting on data quality, data governance, uptake of data solutions and technology, and the commercial impact of the project.
- Technology and architecture
Whether it’s a bespoke or off the shelf system, you need to ensure that you are selecting the right technology and architecture for your organization. These data solutions need to fully integrate with your business, becoming a seamless extension of your operations (not an added layer of complexity).
The longer the timescale for implementation, the more of a risk it poses to the project, your vision and your business. A solid two-year implementation, for instance, could see the business – and the market – in a very different situation by the end of the project compared to the beginning. A data monetization strategy needs to have the flexibility to adapt to changing business circumstances, market demands and digital insights, or it risks becoming redundant before it has even been completed. Adopting ‘sprint’ methodologies – short, sharp and effective workflows, building towards an end goal – is the best way to avoid this problem and craft an agile approach. You can read more about how Agile Solutions do this through our data strategy services here.
What businesses are monetising their data effectively?
Businesses that are already monetising data effectively are not just using data as a resource when they need it, but building it into their day-to-day operations, using it to define their business direction and bring their commercial vision to life.
According to statistics from 2020, the banking sector is leading the way in data monetization, with 60% of banks surveyed by Statista actively monetizing their data and insights through their products and services. It’s unsurprising, given how disruption from the FinTech explosion has driven a real and tangible need for banks to identify their data vision, and bring it to fruition in a competitive market, with services like AI-driven auditing, real-time exchange rates and automated approval processes offering faster, smarter finance options to their clients.
Surprisingly, retail lagged behind other sectors, with just 36% monetizing their data, and as little as 19% quantifying the value of their data in their accounting systems – this, despite e-commerce offering a direct financial link between data insights and purchasing behaviour.
Digital disruption continues to face every sector – from retail to telecoms and beyond – as new providers and forward-thinking market leaders utilize data to differentiate themselves in the market and capture new commercial opportunities. As a result, data monetization is becoming a critical need, not a nice to have, for organizations in every market.
Identify your vision and start monetizing your data with Agile Solutions. We deliver fast and flexible ways to modernize, manage and monetize your data, with a people-centric approach that ensures your data vision stays grounded to your organizational needs. To take the first step to monetizing your data, contact our team of experienced data consultants.