Data to Dollars: How Data Monetization Drives Business Transformation

Spend Matters welcomes this guest post from Pedro Arellano, vice president, product strategy at Birst, an Infor company.

Your department, and entire company, produces vast amounts of data every day. Early on, you may have harnessed enterprise data to improve internal operations and achieve new efficiencies. Perhaps your company has embarked upon a digital transformation journey driven by data. But there is a new opportunity that will distinguish the leading companies from the laggards: monetizing your organization’s data by developing and delivering commercial data products.

Data Monetization is on the Rise

Data monetization has been on the scene for some time. Forrester reports that “one-third of companies are commercializing
or sharing their data for revenue. The trend cuts across industry, company size and market segment.” The findings of a survey released by The Economist Intelligence Unit, of 476 senior executives worldwide, were even more ambitious:

  • Almost 60% of organizations are already generating revenue from their data and will continue to do so.
  • 83% say data is used to make existing products and services more profitable.

Strong Business Benefits

Companies of all kinds are getting creative with data monetization because their enterprise peers recognize that it delivers three important business benefits:

  1. Drive revenue and increase the value of their services
  2. Create competitive advantage
  3. Improve the customer experience

Here are a few inspiring examples.

Drive revenue: In the engineering and telematics industry, a provider of GPS vehicle and fleet tracking solutions applies analytics to its data to show device usage and utilization. The company, which sells into the transportation industry, helps its logistics customers to manage fleet and truck utilization and lower costly truck idle times.

The telematics company has deployed 3.2 million internet of things (IoT) devices that produce GPS location and usage data. In turn, the company sells data subscription services to:

  • Insurance providers so they can underwrite premiums based on usage, not driving records
  • Auto dealers to protect assets and detect fraud

The new data subscription revenue supplements the company’s one-time revenue from GPS device sales. Equally important, the data-based services have helped the telematics company raise customer retention rates by 30 percent.

Competitive advantage: Another company in the transportation world, offering fleet management solutions, sells GPS device data and data from accelerometers, tire pressure and rollover protection systems. Its transportation and logistics customers use the data to improve service performance and reduce cost of operations by tracking and measuring operating costs (miles per gallon), driver safety (speed) and compliance metrics (violations). The fleet management company’s customers have realized:

  • 58.4% safety and compliance improvements, saving $5,000 per truck
  • 64.8% fewer moving violations compared against U.S. benchmarks
  • 9% MPG increase and new fuel-management processes in place

Improve Customer Experience: An energy company that helps to power the smart grid uses analytics to do predictive maintenance and reduce fraud. It collects smart meter data at five-minute intervals, analyzing the data internally to improve outage response and optimize repair crew dispatch times. In addition, it utilizes device usage frequency to predict which devices will fail, shipping new devices before failure. Finally, the usage data reveals fraud and energy meter tampering.

A Final Note

In its data monetization report, Forrester notes an impressive characteristic: high-growth companies, with revenues increasing at an annual year-over-year rate of 10% or more, are nearly three times more likely to share or sell their data than low-growth companies (0%–4% revenue growth). While there is no proven cause and effect, this finding suggests that companies that can successfully monetize their data will not only have a clear advantage over their competitors, but will also be better positioned to drive real business transformation.

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