Mareeg.com-LONDON – Many people have long believed that if government and the private sector
agreed to share their data more freely, and allow it to be processed using the right
analytics, previously unimaginable solutions to countless social, economic, and
commercial problems would emerge. They may have no idea how right they are.
Even the most vocal proponents of open data appear to have underestimated how many
profitable ideas and businesses stand to be created. More than 40 governments
worldwide have committed to opening up their electronic data – including weather
records, crime statistics, transport information, and much more – to businesses,
consumers, and the general public. The McKinsey Global Institute estimates that the
annual value of open data in education, transportation, consumer products,
electricity, oil and gas, health care, and consumer finance could reach $3
These benefits come in the form of new and better goods and services, as well as
efficiency savings for businesses, consumers, and citizens. The range is vast. For
example, drawing on data from various government agencies, the Climate Corporation
(recently bought for $1 billion) has taken 30 years of weather data, 60 years of
data on crop yields, and 14 terabytes of information on soil types to create
customized insurance products.
Similarly, real-time traffic and transit information can be accessed on smartphone
apps to inform users when the next bus is coming or how to avoid traffic congestion.
And, by analyzing online comments about their products, manufacturers can identify
which features consumers are most willing to pay for, and develop their business and
investment strategies accordingly.
Opportunities are everywhere. A raft of open-data start-ups are now being incubated
at the London-based Open Data Institute (ODI), which focuses on improving our
understanding of corporate ownership, health-care delivery, energy, finance,
transport, and many other areas of public interest.
Consumers are the main beneficiaries, especially in the household-goods market. It
is estimated that consumers making better-informed buying decisions across sectors
could capture an estimated $1.1 trillion in value annually. Third-party data
aggregators are already allowing customers to compare prices across online and
brick-and-mortar shops. Many also permit customers to compare quality ratings,
safety data (drawn, for example, from official injury reports), information about
the provenance of food, and producers’ environmental and labor practices.
Consider the book industry. Bookstores once regarded their inventory as a trade
secret. Customers, competitors, and even suppliers seldom knew what stock bookstores
held. Nowadays, by contrast, bookstores not only report what stock they carry but
also when customers’ orders will arrive. If they did not, they would be excluded
from the product-aggregation sites that have come to determine so many buying
The health-care sector is a prime target for achieving new efficiencies. By sharing
the treatment data of a large patient population, for example, care providers can
better identify practices that could save $180 billion annually.
The Open Data Institute-backed start-up Mastodon C uses open data on doctors’
prescriptions to differentiate among expensive patent medicines and cheaper
“off-patent” varieties; when applied to just one class of drug, that could save
around $400 million in one year for the British National Health Service. Meanwhile,
open data on acquired infections in British hospitals has led to the publication of
hospital-performance tables, a major factor in the 85% drop in reported infections.
There are also opportunities to prevent lifestyle-related diseases and improve
treatment by enabling patients to compare their own data with aggregated data on
similar patients. This has been shown to motivate patients to improve their diet,
exercise more often, and take their medicines regularly. Similarly, letting people
compare their energy use with that of their peers could prompt them to save hundreds
of billions of dollars in electricity costs each year, to say nothing of reducing
Such benchmarking is even more valuable for businesses seeking to improve their
operational efficiency. The oil and gas industry, for example, could save $450
billion annually by sharing anonymized and aggregated data on the management of
upstream and downstream facilities.
Finally, the move toward open data serves a variety of socially desirable ends,
ranging from the reuse of publicly funded research to support work on poverty,
inclusion, or discrimination, to the disclosure by corporations such as Nike of
their supply-chain data and environmental impact.
There are, of course, challenges arising from the proliferation and systematic use
of open data. Companies fear for their intellectual property; ordinary citizens
worry about how their private information might be used and abused. Last year,
Telefónica, the world’s fifth-largest mobile-network provider, tried to allay such
fears by launching a digital confidence program to reassure customers that
innovations in transparency would be implemented responsibly and without
compromising users’ personal information.
The sensitive handling of these issues will be essential if we are to reap the
potential $3 trillion in value that usage of open data could deliver each year.
Consumers, policymakers, and companies must work together, not just to agree on
common standards of analysis, but also to set the ground rules for the protection of
privacy and property.
Nigel Shadbolt is a founder of the Open Data Institute. Michael Chui is a
partner at the McKinsey Global Institute, specializing in big data.