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 what is called “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, healthcare and consumer finance could reach US$3 trillion.
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 US government agencies, the Climate Corp (recently bought by Monsanto Co for US$1.1 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 startups are being incubated at the London-based Open Data Institute, which focuses on improving public understanding of corporate ownership, healthcare 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 US$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 the environmental and labor practices of producers.
Consider the book industry. Bookstores once regarded their inventories as a trade secret. Customers, competitors and even suppliers seldom knew what stock bookstores held. Now, in 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 decisions.
The healthcare sector is a prime target for achieving new efficiencies. By sharing the treatment data of a large patient population, for example, healthcare providers can better identify practices that could save US$180 billion annually.
The Open Data Institute-backed startup 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 US$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 percent drop in reported infections.