Open data: Driving growth, ingenuity and innovation


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Open data: Driving growth, ingenuity and innovation

  1. 1. Open data Driving growth, ingenuity and innovationA Deloitte Analytics paper
  2. 2. ContentsForeword 1Executive summary 3Our vision for open data 4Build a strategy to use open data 10Change the way your business competes 16Change the way your business engages with customers 22Tackle the challenges of open data 26How well is your business doing? 30Notes 32Contacts 33
  3. 3. ForewordWelcome to this Deloitte Analytics white paper – the We have arrived at a tipping point for businesses,first from a new insight programme we have embarked consumers, governments and citizens. Publicly availableupon this year in collaboration with Professor Nigel resources have reached the critical mass necessary forShadbolt, Head of the Web and Internet Science Group businesses in all industries to be able to seize upon theat the University of Southampton and co-director of the rich tapestry of open data and use it to improve theirOpen Data Institute. products and services. Furthermore, we predict that businesses will begin to loosen the shackles on theirIn a series of points of view and research papers, we own data by using open innovation to harness theare seeking to demonstrate that organisations in the interests and skills of a more digitally connected public.future will need to compete primarily on the basis of Together, these two mechanisms will change the waythe insights they can extract from data and turn into that businesses compete in the future.decisive action. We thank Nigel and the many executives who contributedThis publication presents Deloitte’s vision for open data their time to share their thoughts and ideas with us, and– a subject that has, until now, been overshadowed we commit to further research over the coming months tounhelpfully by considerations of ‘big data’. Open data verify the value that open data can deliver to about much more than improving governmenttransparency and it is now emerging from its silent We hope that you and your colleagues find our viewsrevolution. thought-provoking and useful. We thank you for your interest and welcome your feedback. Richard Hammell Partner, Deloitte Analytics Open data Driving growth, ingenuity and innovation   1
  4. 4. “ piece of content or A data is open if anyone is free to use, reuse, and redistribute it – subject only, at most, to the requirement to attribute and share-alike.” Opendefinition.org2
  5. 5. Executive summaryOpen data will drive growth, ingenuity and Substantial education is required to ensure that individualsinnovation in the UK economy and businesses understand the benefits and challenges ofData is the new capital of the global economy, and open data. The growing value of open data must also goas organisations seek renewed growth, stronger hand in hand with increasing levels of responsibility andperformance and more meaningful customer governance on its availability and distribution.engagement, the pressure to exploit data is immense. Deloitte believes that the open data ecosystem hasIn recent months, businesses have become hooked on fundamental implications for the future of business and‘big data’ – the term coined to describe the unremitting the nature of customer interaction. The trend towardsincrease in data volume and the technologies needed greater provision and use of open data will be irresistible,to collect, store, manage and analyse it. In contrast, forcing businesses to conceive new commercial models,many businesses have a blinkered view of open derive higher quality insights, develop new ways ofdata. Allowing anyone to use and redistribute data engaging with stakeholders and ultimately enable thefreely is viewed chiefly as a mechanism employed by economic and societal benefits of open data to emerge.governments to increase public service transparencyand enable citizens to hold officials to account. As a result, we foresee that open data, and not simply big data, will be a vital driver for growth, ingenuity andHowever, open data is an essential part of the innovation in the UK economy.burgeoning data landscape and a rich ‘ecosystem’is beginning to emerge. Publicly available resources There are four key aspects to our vision:contributed by the Government and a growing number 1of businesses and citizens have reached the critical mass Every business will have a strategy to exploit thenecessary to trigger a step-change in business attitudes rapidly growing estate of open data.towards open data. Businesses in all industries can 2now find relevant open data and use it to improve their B usinesses will increasingly open up their dataproducts and services. New businesses, like Duedil, i3 to revolutionise the way they compete.Education Services, Parkopedia and Spotlightonspend, 3are emerging whose commercial models are predicated B usinesses will use open data to inspireon the insight they deliver from open data. customer engagement. 4Furthermore, businesses recognise that value cannot B usinesses will work with the Government tobe derived from the data’s volume alone. Leading establish a new paradigm in data responsibilityorganisations such as Google and Asos are already and privacy.pushing ahead with opening up their own data toimprove customer and supplier interconnectivity.And although businesses will need to overcome the To formulate this vision, Deloitte has sought a balanceinevitable tension between the value they traditionally between our own views on the matters that weascribe to proprietary data and the value of opening hope will further the debate on open data and the as-yetup, making their data more accessible and combining it limited evidence from examples of open data in business.with other sources will dramatically increase its value to Our views have been reinforced by further qualitativethe economy. evidence gathered through a series of roundtable discussions we held earlier this year with executives from organisations in the public and private sectors. Open data Driving growth, ingenuity and innovation   3
  6. 6. Our vision for open data4
  7. 7. Every business will have a strategy to exploitthe rapidly growing estate of open dataBusinesses will seek out and use relevant opengovernment dataThe Government has now opened up over 8,000unique datasets, most of them on, the UK’sofficial open data site, and more are being added everymonth.1 The Government has estimated that the valueof this data to the economy in 2011 was £16 billion.2The breadth and depth of data now available suggeststhat businesses in every industry will benefit from usingit to improve the quality, completeness and utility oftheir own data and to look for opportunities to developnew services. For example, insurers can incorporate Businesses will help the Government to enhance the quality and consistency of public services By providing their data-related capabilities to analyse public data, businesses will help the Government reveal underperformance and pinpoint inconsistencies. Through this closer partnership, bad practices will be reduced and best practice institutionalised through change programmes aimed at improving outcomes. As currently demonstrated in tax and welfare, businesses will also help government departments reduce error and increase detection rates for fraud through the use of analytics. 1mortality, health, traffic, transport, environment andcrime data; retailers can use demographic, populationwealth and well-being, property and footfall data.The rapidly increasing commercial significance of opendata and the growing amount of public and privatesector data becoming available will demand a strategicresponse.Government policy will become more proactive toencourage businesses to use open dataThe Government’s current approach is too passive tosupport businesses in fulfilling the potential of opendata. A recent National Audit Office report on opendata suggests that the Government lacks a firm graspof whether the potential of its transparency programmeis being realised.3 In the future, the Governmentwill encourage businesses to engage with opendata by providing better explanations of the contextsurrounding public data resources, particularly aroundtheir scope and quality, and businesses will be able todraw on the relevant department or agency’s in-depthexperience to ensure that the data can be used in anappropriate way to champion innovation. Open data Driving growth, ingenuity and innovation 5
  8. 8. 2 Businesses will increasingly open up their data to revolutionise the way they compete Opening up business data will enable new data-as-a-service business models Leading businesses, such as Google and Asos, recognise that new business models, which are based on free access to their data, have the potential to generate a good return on investment. They also stimulate increased engagement with developers and consumers, and positively disrupt the market. Their success will kindle new commercial ventures (both standalone and within large-scale companies), which will use mash-ups of open government data and their own proprietary information to offer free and premium services to consumers. Goldcorp, Boehringer Ingelheim and Dunhumby are examples of businesses that have used such open innovation successfully, and competition websites, such as and, will continue to grow in popularity. Specialist competitions will also be used by businesses as a way of attracting and selecting talent with new models of employment (part- and full-time) developing. Businesses will also draw on the resources of the crowd to clean their data and improve its accuracy. Businesses will open up data to collaborate more effectively with partners and suppliers They will generate new sources of revenue and ignite Opening up data will drive more collective business new opportunities for creativity and innovation. behaviours and, in particular, help organisations to optimise supply chains by making all elements The economic contribution of these new businesses of service or product provision more open and will overtake the contribution from open government efficient. The increasing availability of open data from data alone. Several examples point to such a powerful governments as well as businesses will give rise to economic impact: for instance, in late 2011, Duedil, an more collective behaviour as unexpected links and open data start-up, was valued at around £20 million by opportunities emerge between different data sets. investors keen to acquire the company.4 And in 2010, Factual, a US-based start-up and aggregator of publicly available data received a first tranche of investment funding of $25 million.5 Businesses will experiment with opening up discrete quantities of data Our roundtable discussions suggested many businesses are wary that open data involves opening up everything for free. However, in the early stages, businesses will be selective and directed in which data to open up to quantify specific commercial and customer benefits and develop their open data strategy. Under the continuing data deluge, businesses that struggle to identify which of their many data sets has value or that cannot find the necessary analysis skills in-house, will tap into the resources of the crowd. They will open up discrete data resources and challenge their customers or the wider public to submit ideas or develop solutions in exchange for financial rewards.6
  9. 9. Businesses will use open data to inspire customerengagementBusinesses will give data back to help customersget the best dealsConsumer groups and the Government will redoubletheir efforts to help customers pool their data to benefitfrom economies of scale. More collective purchasingschemes will emerge, similar to the recent collaborationbetween the community website 38 Degrees andWhich?, the consumer organisation, which helpedindividuals with similar usage profiles purchase energydeals collectively.6 Through a combination of regulatorypressure and commercial opportunity, businesseswill get in the habit of providing customer data back Consumer pressure will compel businesses to become more transparent, not less Value- and environment-conscious customers will continue to put tremendous pressure on all organisations to be more transparent about their business dealings and corporate and social responsibilities. Some leading businesses, like Enel, Italy’s largest power company, and Nike, are more proactive, publishing their data to demonstrate a commitment to transparency and sustainability.8, 9 Other organisations that follow such steps will benefit from a more positive perception of their brands, which 3to individuals, and will make it easier for existing will not only improve customer engagement andand potential customers to use their data to find the retention but also enhance shareholder deal.Customers will engage with businesses that aremore open with their dataDespite their apparent openness, recent Deloitteresearch suggests that in a variety of scenarios nearly70 per cent of individuals are opposed to organisationsusing their personal data or other data about them.7In the future, engaging individuals through social mediarather than simply monitoring what they post will startto build tremendous value for all parties and also createa wealth of data, especially around customer sentimentor suggestions, which businesses will use to enhanceservice quality and customer experience.Giving data back, and being transparent about the wayit is used and the benefits it can deliver to customers,will help businesses establish a reputation for beingsmart and responsible with open data. Open data Driving growth, ingenuity and innovation 7
  10. 10. 4 Businesses will work with the Government to establish a new paradigm in data responsibility and privacy Businesses and public sector bodies will recognise Organisations will do more to understand and deal that traditional safeguards do not go far enough with the unintended consequences of open data The increasing volume, complexity and openness of Although the original intention behind publishing data challenge the current regulatory and technological data may be to deliver a specific benefit or a greater safeguards for privacy. New policies and practices will public good, the serendipitous use of open data will be required to create the environment for both growth continue to give rise to unintended and potentially and protection. harmful consequences. Businesses and public sector bodies that consider opening up will start to dedicate This is due to the increased likelihood that by combining efforts to identify potential benefits and hazards, and data sets of increasing size and granularity, the identity the means by which they can be realised or mitigated. of individuals will be revealed despite measures Organisations will also consider conducting small-scale implemented in each data set – a phenomenon referred experiments by opening up elements of their data to to as the ‘mosaic effect’. And, while big data is often understand what might happen for both good or harm processed behind closed doors, the rise of the open if further data is released. data ecosystem will trigger a new public debate, which, in turn, will recalibrate society’s conventions and increase the moral standards applied by businesses towards privacy and the responsible use of data.8
  11. 11. Figure 1. The open data ecosystem There are three principal constituencies in any successful open data ecosystem: government, business and citizen. Each constituency supplies data to itself and to others. In turn, businesses and government Business data use the data to deliver services demanded by all n B u si es s constituencies. The three classes of open data supplied by the constituencies and used to deliver services are: Open government data – data produced, collected or paid for by the public sector, subject to restrictions relating to sub judice, national security, commercial sensitivity and privacy. In addition, special commercial Business Business arrangements also being made for certain trading data data funds, including Companies House, the Ordnance Survey, the Meteorological Office and HM Land Government Citizen data data Registry, which together form the newly created Public Data Group.10 vern men C it iz e n Go t Open business data – data produced or collected by the private sector and published freely and openly, subject to restrictions that individual businesses decide to put in place. Government data Citizen Open citizen data – the personal and non-personalGovernment data data data of individual citizens published into the open domain. Citizen data Supplies data to Uses data to deliver toSource: Deloitte LLP Open data Driving growth, ingenuity and innovation   9
  12. 12. Build a strategyto use open data10
  13. 13. Businesses will seek out and use relevant open Deloitte research indicates that a total of 49 countriesgovernment data now have more than 220 distinct official or unofficialThe UK Government has now opened up over 8,000 open data websites, which provide downloadableunique datasets on and through affiliated sites public datasets at a national, local or city level. Theresuch as Many other countries also are many more individual government departmentshave open data policies. As well as official government- or agencies that also have websites, but these havesponsored websites, there are numerous unofficial sources not been included in our count. The list is dominatedof government data – usually compiled by publicly spirited by sites in the UK, the United States and Canada, butindividuals or communities – or aggregators, such as almost every populated world region is, which publish hyperlinks and data setsfrom many public sector organisations. In a March 2012 research note, Policy Exchange, one of the UK’s leading think tanks, presented examples of different types of open government data, as illustrated in Figure 2.Figure 2. The UK’s public data universe Types of data Public sector users Examples • anagement information and other operational M • hitehall departments W • epartmental accounts and organisational structures D data collected or created as part of the • overnment agencies and non-departmental G • egisters of public property R day-to-day business of government public bodies • ublic spending data P • ocal government institutions L • on-personal data related to the health and N education systems • alendars of public holidays and other key C administrative information • eographic and other data describing the G • mergency services E • aps and charts M physical and environmental characteristics of • ilitary M • eteorological data M the UK • oastguard C • ydrographical data H • ountain rescue M • ostcode and address data files P • nvironment agency/departments E • dministrative data describing the business A • ax and welfare administration T • ompany registrations C environment and public realm • lanning authorities P • and and property registrations L • ourts and justice system C • lanning data P • ehicle and mileage data V • ata related to public transport networks and D • ublic transport operators P • imetables T transit systems • ublic infrastructure bodies P • are schedules F • lanned and emergency works P • ransit loading data T • ational statistics describing the UK economy, N • hitehall departments W • ational accounts N state and society • overnment agencies and non-departmental G • urveys of attitudes and behaviours S public bodies • ther statistics collected for analysis and/or the O • ocal government institutions L public record • ata created in the course of conducting D • niversities and other educational U • arious mass datasets V publicly-funded research establishments • ublished research PSource: Policy Exchange11 Open data Driving growth, ingenuity and innovation   11
  14. 14. Figure 3. Reasons for the Government to open up and reasons for them to remain closedGovernment Reasons to open up to other Reasons for opening up Reasons for opening up to public sector bodies: to businesses: to citizens: • improve public services and • stimulate economic growth • demonstrate transparency and outcomes by encouraging businesses to anti-corruption measures • provide oversight of activities exploit the open data • increase public access to data of a wide range of public • generate competition • facilitate markets and choice sector bodies. • help private sector suppliers of for consumers public services • build trust and improve Reasons for other public sector • add value to business data reputation and moral standing bodies to need data: • improve business decisions. • reduce costs of Freedom of • easure performance and m Information requests perform benchmarking Reasons for businesses to need • improve quality of data • inform strategic decisions data: • stimulate innovation and • improve productivity • increase fidelity and utility of entrepreneurship, and crowd- • improve efficiency of public own data source ideas services • offer new data-enabled • create a platform for public • reduce overall costs of services to customers engagement nationally and collecting and managing data • satisfy journalistic interest. locally. • make sense of disparate data and provide a view of Reasons for citizens to need data: aggregate fiscal risk • satisfy curiosity and academic • satisfy legal or mandatory interest reporting requirements. • build personal status by reusing data • offer insight back to local community • build entrepreneurial business • hold public sector officials and institutions to account • ‘real-time’ information to use make life easier. Customer Government Business or Citizen Reasons for not opening up data Reasons for not opening up Reasons for not opening up data to other public sector bodies: data to businesses: to citizens: • loss of revenue, particularly for • loss of revenue, particularly • increasing public scrutiny trading funds for trading funds of organisational or even • increasing departmental • embarrassment over content individual performance scrutiny or quality. • loss of revenue, particularly for • cost and effort associated with trading funds maintaining data. Reasons businesses have for not • embarrassment over content demanding data: or quality. Reasons other public sector bodies • lack of awareness have for not demanding data: • lack of understanding of Reasons citizens have for not • lack of awareness. potential utility demanding data: • seen to be irrelevant to • lack of awareness business. • lack of interest • worries over security and privacy • potential difficulty in using it. Positive NegativeSource: Deloitte LLP12
  15. 15. Such is the scope of published data that most Government policy will become more proactive tobusinesses can find relevant examples to enhance encourage businesses to use open datathe richness, quality and accuracy of their own assets The challenge for the UK Government is not with the– regardless of whether they choose to open up or supply of data – although some of the roundtablenot. However, businesses need to recognise that their participants argued that many governmentdemand for open data is one of the most significant departments and their agencies still have a long waystimuli for government policy. Without it, there is a risk to go before they can consider themselves to be trulythat the ecosystem will falter and government initiatives open. Instead, the principal emerging challenge – notwill stall. The Government’s reasons for and against just for the UK but for all nations embarking on theopening up are detailed in Figure 3. open data journey – is encouraging other public sector bodies and businesses to use the open governmentOpen government data can be used to enhance data data as a matter of course.already held by businesses. This works both intra-industry and inter-industry. For instance, businesses Many of the businesses we spoke to during ouroffering transport services to customers can combine roundtable discussions were simply unaware of thetheir own data with that from the public transport extent and depth of open government data nownetwork to provide tailored itineraries, and healthcare available. This suggests that it is not enough forproviders can use public healthcare, demographic and public sector bodies simply to publish this data; theysocial deprivation data in combination with their own also have a duty to educate businesses that may bedata to configure their services more accurately to serve able to exploit the data’s full potential by drawingclient needs. on their intimate and unrivalled expertise, which in many cases has been amassed over years or evenAcross different industries, businesses can combine decades. Education, however, is not a one-wayexisting customer data with open government data street. Businesses, too, should plan to keep watch forcovering a wide array of sectors to enable more forthcoming open data releases and actively seek outaccurate segmentation and profiling of lifestyles better explanations of existing data resources from theand life events; retailers could use open transport relevant government department or, demographics and wealth data to identify newlocations for store placement or advertising; insurerscan use mortality, crime, transport, meteorologicaland environmental data to develop better location-based models of risk to ensure customers are chargedappropriate premiums for where they live. “ aving this public data enables HBusinesses can also make use of open government data social enterprises to start upto offer new data-led services, which package the dataand present it to customers in an attractive and easy- anywhere in the country,to-use way. Current market activity is focused arounda relatively small number of entrepreneurial businesses, reinforcing local economies andsuch as those illustrated in Figure 4. Many of theseentrepreneurial businesses are taking advantage of the also enabling a new generation oftrend towards mobile data-enabled applications, whichcan serve customers wherever they are and whatever small businesses to be created.”they are doing. These innovations can be replicated Theo Bertram, Google12by businesses of any scale, and also offer investmentand acquisition opportunities that could help moretraditional businesses transform their brand and marketpositioning. Open data Driving growth, ingenuity and innovation 13
  16. 16. Figure 4. Examples of innovative companies delivering services using open government data Red Spotted Hanky Launched in 2010, Redspottedhanky is an online ticket retailer which aims to offer customers an easier way to book without any administration or payment fees. Redspottedhanky relies on data from the rail industry to offer customers low-cost advance bookings. The business employs 13 people and is growing fast, with a loyalty scheme, a tie-up with Tesco and a ‘price-promise’ for customers. Duedil Duedil is a business information provider based in London’s Soho. Duedil gives free access to governance and financial information for every company in the UK and Ireland, and combines this with data from online sources, Application Programming Interfaces (APIs), social networks and more. Duedil was launched in April 2011 by entrepreneur Damian Kimmelman and has now grown from six employees to 14. Its aim is to make business more transparent, by opening up company information to make the due diligence and research process simple and intuitive. By aggregating and linking all the available information, users can gain a comprehensive understanding of businesses and the people who run them. The information currently available on the site will always remain free. However, in the near future, it will offer a platform to sell premium data – whether privately bought or proprietary. In one year it plans to double the size of the team again, and aims to become the number one source of company information in the UK. Parkopedia Parkopedia is an innovative open data company which fuses location and other local data. A small UK-based business, it uses live data from local authorities to help drivers identify free car parking spaces. Parkopedia has grown to become the world’s leading source of parking information covering more than 20 million spaces in 25 countries. Used by millions of drivers, Parkopedia’s services include a pre-booking tool which allows drivers to book parking online, and real-time parking space availability information. Parkopedia also works with other organisations (e.g. AA, the UK’s Automobile Association) to integrate its data into journey planner mobile applications and ‘satnavs’. Spotlightonspend Spotlightonspend is a managed service that is comprised of everything necessary to facilitate cost‑effective publication of the spend and related information you elect to make available to the general public. Spotlightonspend is designed to: • cut costs by removing the need to add to the workload of current staff or increase headcount • eliminate the complexity of becoming and staying compliant with policy • reduce the risk of inadvertent breach of data protection legislation • nhance the information published to improve its accessibility, relevance and value for the e intended audience – the general public. Source: Open Data Innovation Community Hub and
  17. 17. Businesses will help the Government to enhance In 2004, Sir Bruce Keogh, Britain’s leading cardiac surgeonthe quality and consistency of public services and now Medical Director for the National Health ServiceOpen data encourages a stronger partnership between (NHS), persuaded his peer group to publish outcomegovernment and businesses, especially where the data, including mortality rates, for hospitals and surgeonsGovernment can draw on businesses’ capabilities for across the UK. Surprisingly, the data showed considerablemanaging and analysing data and their expertise in variations in outcomes. As a consequence of opening up,strategy and change management. bad practices began to be eliminated and best practice spread. Over the next few years, mortality rates fell byBusinesses can offer their information management 22 per cent.14 Taking this pioneering concept further, inservices to help the Government reduce the level of March 2012, the NHS Atlas of Variation in Healthcareeffort and cost incurred by the separate departments for Children and Young People was published.15 Thisand agencies that collect and manage similar document is aimed at reducing unwarranted variationsdata assets. In particular, businesses can use open in healthcare provision to increase value and improve thegovernment data to identify opportunities that would quality and efficiency of care. Ultimately, by using data toallow the Government to take a more unified approach. identify and reduce discrepancies, the health outcomes forThis will help to improve the data’s quality and accuracy children and young people will be that decisions made using it become more reliable.Thus policy and service implementation will be As well as focusing scrutiny on particular sectors, openstrengthened considerably. government data can help entire cities function more efficiently. Cities and towns make sensible loci for openMore complete and accurate data will also result in data because they are self-contained and much offewer errors and, with appropriate use of analytics, the government data produced or collected by localreduce the likelihood that fraud will go undetected. In authorities is of direct interest to businesses and theDecember 2011, for instance, the Government opened local population.up prescribing data for every General Practitioner inthe UK.13 This data, which includes the name of thechemical or product, number prescribed, numberdispensed, net ingredient cost and actual cost for everyprescription every month, could potentially be mined “ pen data is creating a Oby the Department of Health to identify statisticalanomalies that could point towards error or other bottom-up data economy whereissues with a deeper clinical meaning. 24/7 citizen-led scrutiny will revolutionise public services – the social and economic implications are potentially immense.” Sean McMahon, i3 Education Services16 Open data Driving growth, ingenuity and innovation   15
  18. 18. Change the way yourbusiness competes16
  19. 19. Opening up business data will enable new For example, soon after its launch in 2011, Duedil,data-as-a-service business models the open data start-up which combines data fromWhen we first raised the idea of businesses opening Companies House and other open and proprietaryup their data, most of the private sector participants sources, was approached by a number of organisationsat the roundtables baulked at the thought. First of all, keen to acquire the company that valued it at aroundaccording to the accepted definitions of open data, £20 million.17 In a sign of the expected returns in openopening up business data means providing access to data, Factual, a US-based start-up and aggregator ofeveryone – even competitors. Second, the data must open data for application developers, received a firstbe available free of charge – even for commercial use. tranche of investment of $25 million in December 2010.Despite their concerns, many businesses acknowledged Factual’s resources include government data, datathat they were already open, at least to a limited for over 350,000 consumer products, and an array ofdegree: listed companies provide quarterly and annual assorted data on topics as diverse as the height, weightreturns, and other regulatory news items, and online and body mass index for celebrities and cheat-codes forretailers provide web-based access to products and video games.18 In a presentation to the Web 2.0 Expo ininventory information. 2011, Hal Varian, Google’s chief economist, estimated that his company’s contribution to the US economyThere are numerous reasons for businesses to open up was $119 billion, with $54 billion coming from salestheir data, as shown in Figure 5. of advertising on its search engine, and the remaining $65 billion coming from the amount of time thatThe qualitative evidence suggests that the challenges Google saves employees and researchers compared toto opening up are not technical, they are cultural. traditional library-based searches.19The principal concern among businesses is that givingaway data gives away value and provides advantage to Although these examples are not yet sufficient tosharp-eyed competitors. enable us to estimate precisely the usage of or demand for open business data, nor the contribution suchDespite this, several new business models can run business models can make to the UK economy, theysuccessfully in parallel to ‘free’. Among them, the suggest that the impact of open business data will‘freemium’ model provides businesses with the be significant. Further research is needed to buildopportunity to give away basic data to encourage an evidence base. Indeed, one of our roundtablecustomers to engage with the company and use participants hypothesised that traditional economicrelated services while the company charges a premium models could be turned on their heads by data-as-a-for access to more detailed data. Alternatively, cost service models: in the future, giving away as little assubstitution through advertising – the original Google 20 per cent of a company’s data could generate 80 permodel – provides an indirect return on investment cent of its returns.when data is given away for free. Businesses canalso develop and charge for access to specialisedapplications or ask users to subscribe to webApplication Programming Interfaces. Open data Driving growth, ingenuity and innovation   17
  20. 20. Figure 5. Reasons for businesses to open up and reasons for them to remain closedBusiness Reasons to open up to government: Reasons for opening up to Reasons for opening up to • comply with legal or regulatory other businesses: customers: obligations • data-related services to sell • comply with legal or regulatory • data-related services to sell other businesses obligations government • help partners and supply chain • new data-related services sell • improve collaboration with • gain richer understanding to customers local government of customers and their life • demonstrate transparency and • provide insight into investment circumstances anti-corruption measures and innovation • improve collaboration • build trust, improve reputation • support public – private • support industrial communities and moral standing partnerships. • support local businesses and • crowd-source solutions charities. • crowd-source improvements to Reasons for government to data quality need data: Reasons for other businesses to • create a platform for social • easure performance and m need data: engagement with customers perform benchmarking of • obtain intelligence on • engage data scientists and contractors competitors attract talent. • inform strategic decisions • increase fidelity and utility of • provide a view of aggregate own data Reasons for customers to need data: procurement risk. • satisfy journalistic interest. • improve experience with business • satisfy curiosity and academic interest • build personal status by reusing data • offer insight back to local community • hold executives and businesses to account • ‘real-time’ information to use make life easier. Customer Government Business or Citizen Reasons for not opening up data Reasons for not opening up Reasons for not opening up data to government: data to other businesses: to customers: • loss of revenue • loss of competitive advantage • increasing scrutiny of business • increasing scrutiny • lack of understanding of performance • cost and effort associated with potential utility or benefit • loss of revenue maintaining data • embarrassment over content • embarrassment over content • worries about warranties and or quality or quality liabilities. • cost and effort associated • worries about warranties with maintaining data and liabilities. Reasons government has for not • worries about warranties demanding data: and liabilities. Reasons cutomers have for not • lack of awareness. demanding data: Reasons other businesses have • lack of awareness for not demanding data: • lack of interest • lack of understanding of • worries over security and privacy potential utility of others’ • fear that it will cost money data. • potential difficulty in using it. Positive NegativeSource: Deloitte LLP18
  21. 21. Some businesses already have an open data policy. Four are described in Figure 6.Figure 6. Examples of businesses that have opened up their data or are using other companies’ data Enel Enel, Italy’s largest power company, launched its open data site in August 2011 with three principal objectives: • to increase transparency and involvement by all stakeholders • o improve the business – better information makes better markets t • o encourage innovation – open data stimulates the development of new applications. 20 t Sustainability data and financial performance data are included. Nike Nike publishes an annual Sustainable Business Performance Summary, which describes key data and metrics relating to the company’s sustainability efforts. In conjunction with the release of its report, Nike has also recently launched an interactive web experience at enabling users to explore Nike’s value chain and learn more about its progress and commitments regarding each impact area. It also provides tools where users can design footwear and clothing, check the environmental impact of various material selections and explore the company’s global contracted manufacturing base with an interactive map. 21 Asos In December 2011, the online fashion giant Asos opened up its product and basket services data to external web developers in a bid to extend its wider online presence by allowing others to build Asos-related services. 22 MusicMetric MusicMetric provides insights and understanding into online consumer behaviour globally for the entertainment industry. They aggregate and analyse all music-related information available on the web – from websites mentioning an artist or release, the social networks frequented by music fans, peer-to-peer networks used to trade music and anywhere music fans leave a comment. MusicMetric currently tracks and indexes data for 600,000 artists and over ten million individual releases. MusicMetric provides a limited set of data for free, and offers two data products as a subscription service. 23Source: Deloitte LLPBusinesses will experiment with opening up For example, in 2000, Goldcorp, a Toronto-baseddiscrete quantities of data mining company, ran one of the best known crowd-Many businesses mistakenly believe that opening sourcing competitions by opening up some 400Mbup means publishing everything. However, as the of the company’s proprietary data to the public anddata deluge continues unabated, some organisations offering a total of $575,000 prize money for the bestare struggling to get to grips with the sheer volume estimates and methods for finding gold deposits inand complexity of the data they are collecting; they their mines. Contestants identified 110 targets, morecannot understand the value of it or how best to than 80 per cent of which yielded substantial quantitiesextract insights from it. Businesses, of course, are free of gold. And since the competition was initiated, eightto choose what they open up and what they keep million ounces of gold have been found – worth overclosed. And just as the Government hopes to stimulate $3 billion. Over seven years, Goldcorp increased itsinnovation and the development of new applications market capitalisation from $100 million to $9 billion.24using open government data, businesses, too, can tapinto the resources of the crowd by publishing some of Dedicated open data competition websites, suchtheir data and challenging customers or the public at as and, encouragelarge to submit their ideas and develop better solutions organisations of all types to publish their data and– an approach referred to as open innovation, which incentivise individuals and teams to come up withincurs very little cost. better solutions. Businesses such as Boehringer Ingelheim, a health research company, and Dunhumby, a customer analytics company, are using to tap into the resources of the crowd. Open data Driving growth, ingenuity and innovation   19
  22. 22. But competitions are not the only way of developing However, the participants thought that organised innovative solutions. With open data, almost any collaboration outside the supply chain, while solution or service improvement is possible. For possible, may be very difficult to achieve in practice. instance, by opening up their data, retailers can use They speculated that the businesses most likely to crowd-sourcing to provide new ways for consumers to call for such cooperation would be information‑poor, access their products, and manufacturers can use the without the necessary data assets themselves. crowd to prototype and test virtual designs. Nevertheless, participants considered that greater availability of business data would progressively give Competitions also provide a way for businesses to rise to more collectives – not just within industry attract data talent – the scientists and mathematicians sectors but also across them – as unexpected links and who can make sense of complex data – which is opportunities emerged between data sets, and as more in limited supply. A recent study by the Centre for open data became available. In this context, open data Economics and Business Research suggests that 58,000 benefits the wider community while still preserving the new jobs will be created in the UK economy by 2017 ability of individual businesses to compete. as a result of data.25 Opening up business data or making use of available open data may be interpreted Members of the airline industry, for example, used to by prospective employees and data scientists as a sign be fiercely protective of their data. They did not want that a company is innovative and forward-looking. to give away commercial advantage. Customers had Moreover, businesses can use their data in competitions to visit an airline’s website to find flights, more often to attract, challenge and even select new talent. than not searching on different websites before having On, for instance, successful competitors sufficient information to make a decision on which one from fully open contests are sometimes invited to to book. Then flight search engines emerged, ‘scraping’ participate in elite private contests, which may include data from individual websites to present customers access to proprietary or commercially sensitive data. with unified information on timetables and prices. Although the airlines initially fought this change, over Businesses will open up data to collaborate more time they began to realise that opening up their data effectively with partners and suppliers generated more business. Our roundtable participants thought that opening up data may help to drive more collective business While opening up business data may increase the behaviours. In particular, opening up business data can level of scrutiny from customers, it can also help them help other organisations in the supply chain optimise find, compare and understand products and services their approach, thus making all elements of service or better. For many businesses, this trade-off is positive, product provision more efficient. stimulates growth overall and drives fairer competition.20
  23. 23. “ pen data offers the prospect of instant connectivity O between partners, as in open supply chains, where businesses source from places they might never have considered or even suspected could be a source. Open data can reduce integration costs, improve transparency and harness the innovation of others.” Professor Nigel Shadbolt26 Open data Driving growth, ingenuity and innovation   21
  24. 24. Change the way your business engageswith customers22
  25. 25. Businesses will give data back to help customers These concerns affect how they view open dataget the best deals and how they use it. Such concerns also affect theirMiData, an initiative between businesses, consumer willingness to provide their data in the first place.bodies and regulators in the UK, endorses the Together, these concerns currently drive closedkey principle that data should be released back to individual behaviours and a lack of willingness toconsumers. Although MiData falls outside the strict engage with businesses.definition of open data, from a business perspective,the initiative, and other similar attempts to encourage There are many reasons why customers or citizens maycitizens to take more direct control of their data, is adopt certain behaviours towards their data. A numberessential to increasing customer engagement more of these are highlighted in Figure 7.generally with open data. Allowing individuals to provide their own dataOver time, businesses that sign up to the voluntary and use it to access economies of scale or to getcode will give consumers access to their personal data the best deal is crucial to increasing a portable, electronic format – a concept identical For example, BIS is introducing a range of newto open data. According to the Department for initiatives, including encouraging local areas to developBusiness, Innovation and Skills (BIS), “Individuals will their own collective‑purchasing deals, producingthen be able to use this data to gain insights into their an advice toolkit for consumers, introducing a newown behaviour, make more informed choices about collective‑purchasing innovation prize and piloting aproducts and services, and manage their lives more green collective‑purchasing scheme.efficiently.”27 The community website 38 Degrees brings togetherA minority of customers are already proactive in people to take action on issues that matter to them.controlling their data. Some are even very open with it They have recently collaborated with Which?, the– particularly on social networking sites – and a minority consumer organisation, to help individuals with similarare happy to exchange their data for better and more usage profiles purchase energy deals collectively.28tailored services from businesses or to support a wider In the US, the Green Button initiative is similar and ispublic good. Some, though, are worried about data complemented by an equivalent approach to accessingsecurity and potential invasions of privacy. healthcare services via the Blue Button.29“ e will see … profound changes: A shift away from W a world in which certain businesses tightly control the information they hold about consumers, towards one in which individuals, acting alone or in groups, can use their data or feedback for their own or mutual benefit.” Better Choices: Better Deals30 Open data Driving growth, ingenuity and innovation 23
  26. 26. Figure 7. Reasons for citizens to open up and reasons for them to remain closedCitizens Reasons to open up to Reasons for opening up data to Reasons for opening up data to government: businesses: other people: • comply with legal requirements • no other option • maintain social contact with e.g. planning process, land • improve quality of services friends, family and colleagues registry, census • receive more tailored services • data-related services to sell • provide feedback on public • benefit from collective- other citizens consultations purchasing power • crowd-source ideas • benefit a greater/public good. • insights into their own • form communities and behaviours collectives. • richer, more accurate and Reasons for government to need timely information Reasons for other people to data: • participate in markets in a more need data: • solicit feedback on planning informed and confident way • maintain social contact with applications • receive recommendations. friends, family and colleagues • inform future policy decisions • satisfy curiosity and academic • measure state of population. Reasons for businesses to interest. need data: • build better customer profile to increase fidelity and utility of own data. Customer Government Business or Citizen Reasons for not opening up data Reasons for not opening up Reasons for not opening up data to government: data to businesses: to other people: • worries about security and • embarrassment over content • no need privacy or quality • embarrassment over content • fear of retribution for criminal • concern about businesses or quality activity. using data for profit • worries about security and • worries about security and privacy. Reasons government has for not privacy. demanding data: Reasons other people have for • fear of trespassing on privacy. Reasons businesses have for not not demanding data: demanding data: • lack of awareness • fear of trespassing on • no need privacy. • lack of interest • worries over security and privacy. Positive NegativeSource: Deloitte LLP24
  27. 27. Customers will engage with businesses that are Consumer pressure will compel businesses tomore open with their data become more transparent, not lessThe challenge for all industries is to build customer In the wake of the 2008 financial crisis and mountingawareness – of what data is and what is not collected environmental concerns, the public is demanding thator used and, crucially, what data will be opened up. businesses adopt higher ethical and environmentalBeing transparent about privacy and security measures, standards and give back more to society. For instance,and ring-fencing data likely to generate significant the company Chrinon Limited, which is behindcustomer concern, will help businesses to establish and other open data sites, istrust and still allow opportunities to be created. using open data from governments and businesses to create a free resource for anyone to discoverA recent European Union survey has found that information about the corporate world, includingUK consumers show some of the lowest activity in accounts, director appointments and recent financialEurope, in terms of comparing prices, reading terms transactions. The public availability of this informationand conditions, and showing interest in consumer will drive greater business transparency.information.31 This finding is backed up by a recentDeloitte study of the public’s attitudes towards data use A more proactive approach to opening up data canconducted in April 2012, which suggests that although help to forge a new, more trusted relationship between82 per cent of individuals we surveyed were aware that businesses and consumers; a relationship based ontheir data was collected and used by organisations, evidence rather than hearsay. And while there maythe majority did not know what would happen to the be no direct financial return, both Enel and Nike, fordata or lacked confidence in the benefits that were example, are publishing data to demonstrate their firmsupposedly delivered to them as a result.32 Therefore, commitment to sustainability. According to Nike, thebusinesses need do more to educate customers about company has been reporting its environmental andwhat they are doing with their data. social performance around key impact areas including waste, water, energy, toxics, climate and labourEngaging individuals in a meaningful conversation using since 2001. As well as enabling businesses to take asocial media rather than simply monitoring their posts leadership position on sustainability and corporatefor sentiment can build tremendous value for all parties. social responsibility issues, such efforts may also help toBusinesses can use social media to make their use of create a more positive perception of their brands andcustomer data more visible, help customers to use and improve customer engagement.assess it, and create a wealth of data, especially aroundcustomer sentiment or feedback, which they can usesubsequently to enhance service quality and customerexperience. “ ike is known globally for our N innovative performance products and sustainability has now increasingly become core to our business approach.” Mark Parker, President and CEO, Nike Inc.33 Open data Driving growth, ingenuity and innovation   25
  28. 28. Tackle the challengesof open data26
  29. 29. Businesses and public sector bodies will recognise Advocates of open data talk about techniques suchthat traditional safeguards do not go far enough as anonymisation (where personally identifiableRapid advances in information and communications information is removed) or pseudonymisation (wheretechnology cause headaches for legislators. And for personally identifiable information is replaced withinitiatives like open data, there are often calls for new unique codes), which go some way to alleviate theselegislation to provide the necessary controls or to legitimate privacy concerns. Organisations alsoprotect the rights of customers and citizens. aggregate data, so that characteristics that can be used to identify individual people are replaced by moreHowever, Deloitte questions the need for new widely applicable profiles.legislation around open data, particularly as theEuropean Commission has published new proposals The challenge for open data, though, is that nonefor Europe-wide data protection, which will – if of these techniques provides absolute protection ofenacted – enshrine in national law additional rights identity because of a phenomenon referred to asfor citizens. Instead, different social conventions and the ‘mosaic effect’. In an increasingly digitised andperhaps a more exacting moral code for organisations open world, it becomes harder for individuals ormay be sufficient to protect the rights of individuals. organisations to obfuscate or eradicate identity, andNew legislation should be the act of last recourse. the traditional analogue provisions of privacy are rendered unfit for purpose.The combination of greater organisational transparencyand individual empowerment suggests that newmoral codes in the future will be forged throughpartnerships between organisations and the individualsrepresented within the data. All organisations shouldtake an active role in engaging citizens and customers The mosaic effect: putting togetherin a conversation about the data – perhaps using theMiData charter to define clearly what data is collected, data from different sourceshow it is used and what the benefits are to theindividual and to the wider community. Organisations (pieces of the mosaic) increasesshould also obtain citizens’ and customers’ informedand explicit consent. the likelihood that the resultingThe success of these partnerships will rest on a broader ‘picture’ will reveal the identitypublic debate about the challenges of open data andthe responsibility it places on organisations, especially of the individual. This couldaround privacy. happen despite the protectionsIn a national poll carried out for Deloitte’s MediaDemocracy Survey in March 2012, we discovered that implemented in each data set.85 per cent of respondents expressed concern abouttheir personal data being taken by organisations.34It may be that these concerns have reached such a highlevel as a result of the spate of data breaches in recentyears, particularly where the unencrypted personal dataof millions of people has been lost. As public awarenessabout the scale of ongoing data collection and analysiswill surely increase, such concerns have significantimplications for open data. Open data Driving growth, ingenuity and innovation   27
  30. 30. The onus should instead be placed on organisations An approach based on individual choice builds to use their data responsibly and only in a manner better engagement and trust between individuals acceptable to the individuals. In this way, although and the organisation opening up the data. This is identity could in theory be established, privacy can still very important when individuals might choose to set be preserved by choice – to a degree controlled by the different parameters for how their personal data can be individual, who can be as open or as closed as they like. used by organisations in other contexts. For example, it is possible that a large proportion of the population These kinds of steps are already being considered would, on the one hand, be happy for their health elsewhere. For example, in March 2012, the Federal records to be opened up if they thought that it would Trade Commission (FTC), the US’s chief privacy help fight common diseases, but may be unhappy on regulator, concluded a two-year study of internet the other at the prospect of their data being used by privacy by issuing a report that called for sweeping pharmaceutical companies to make extra profit. changes by businesses and policymakers to help consumers better understand and control the With open data, choice works best and is simplest to information being collected about them.35 The FTC implement at the point of data collection rather than report calls for businesses to: at the point of data use. This does not change the fact that organisations making use of open data should be • build in consumer privacy protection at every stage transparent about their sources of data, but it does in developing their products and delivering their mean that the burden of responsibility is on the original services publishers. • give consumers the option to decide what Giving people the choice assumes that they have information is shared about them and with whom sufficient understanding of what information is held about them and the scenarios that make use of this • disclose details about their collection and use of information to provide benefits. This understanding consumers’ information, and provide consumers with is a prerequisite for individuals to be able to trade off access to the data collected about them. their privacy for some kind of benefit, and provides an opportunity for all organisations involved with open The FTC report complements President Obama’s data to build trust with the public. new plan to protect privacy in the internet age by adopting a consumer privacy bill of rights, which also Building this incentive programme and engaging the seeks to implement many of the same initiatives as public through new online channels – such as social the MiData programme in the UK and the proposed media – will be an important step towards tackling European Commission Directive on Data Protection.36 what many of our roundtable participants considered The Administration’s plan will give consumers several to be the most difficult of all open data challenges. It is key rights, among them the right to exercise control also where new regulations and a public debate about over what personal data companies collect from new social conventions could potentially come into them and how they use it, the right to access easily play. understandable information about privacy and security practices, and the right to access and correct personal data in usable formats.28