Is data really the currency of tomorrow? (1/2)
Data is widely regarded as the fuel of the modern economy. They have the merit of being in constant growth and in theory offer an ever finer knowledge of the subjects they describe. No one seems to question this inexhaustible source of value for users, businesses and public services. Take any adjective, in English imperatively, and put it before “data” (smart, big, small, open, activable…) and you have the start of a successful business plan. But let’s be pragmatic and consider this famous value in the light of money, the store of value par excellence. Is data really comparable to a currency? And if they are, what can be done to ensure their strength, integrity and fluidity?
Back to our classics (and Wikipedia). Aristotle defines money by the following three functions:
Intermediary of exchanges (or discharge power)
Store of value
How can data fulfill the three monetary functions?
The liberating power of data is the most sought after, because as Gordon Gecko would say: “It’s all about bucks kid, the rest is conversation“. Taken in the strict sense of the term, this power is quite limited if we except companies that directly sell the data collected through their medium. These are mostly free services or content, for advertising purposes. But if we broaden this meaning a bit, data can clearly affect the bottom line of many businesses, either by allowing them to increase their sales or by allowing them to reduce their costs. A data-driven company will undoubtedly gain in productivity, but it is also necessary that the analytical projects are implemented by a strategy that firmly links the processing of the data and the key indicators of economic performance of the company. There are many effective examples: data can allow additional sales (cross-sell or upsell), better targeting and therefore better ROI of advertising investments, better allocation of resources (stock, production, etc.), better marketing targeting in the broad sense etc. Anglicism a little painful “actionable”Designates this capacity of the data to act directly to improve the efficiency of the company. However, this almost magical belief in the return on investment of projects linked to “data” leads to neglecting the fact that data has no intrinsic value. When it is collected because it is “collectable” (and you never know, it seems that it is the oil of tomorrow), it is only a cost center, and conversely reduces power. release (cash, to put it simply) available to companies.
This function refers to the descriptive dimension of money, and it applies very well to data, in all its forms. Without money, and without data, it is impossible to estimate relative values and make informed economic decisions. Money makes it possible to compare, to get out of the subjective by giving common references. It puts heterogeneous groups into perspective. Data can and must play exactly the same role. This function may be less exciting, but it is nevertheless crucial. There is a tendency to search for data systematically “actionable»And to despise the dimension which relates to the description and simple reporting. However, we must be wary of this reflex of wanting to run before knowing how to walk. It’s the best way to beat it up. It must be ensured that the data correctly describes the reality on which it is supposed to act. How to optimize (step 2) what cannot be measured (step 1) correctly? How to arbitrate your digital strategy if you do not have a homogeneous and consistent measure of your online performance? How to promote your site or application if you are not able to certify the audience in a precise and detailed manner. The position of accountant was probably not voted “sexiest job of the 21st century” unlike that of Data Scientist, but it would not occur to anyone to do without rigorous accounting. Many data-related jobs will appear and disappear in the years to come, while data accountants, the professionals capable of ensuring that data reliably and consistently measures what it is supposed to describe have beautiful days ahead of them. In this period when digital technology is changing all the balances and where everyone is trying to understand what the future of their industry will be like, it is essential to put order and certainty in the measurement of your assets (and let’s not count too much on the giants of the sector to worry about rigor and transparency). Quality data (and money) have this precious value: it certifies the value by describing it precisely, by making it comparable.
Store of value
This third function of money refers to its ability to transfer purchasing power over time. It is a deferred payment standard. This function is questionable when it comes to data. Some can indeed expire very quickly, while others will increase in value over time if they have been correctly collected and stored. To ensure this value over time, the quality of this data is essential (we will see below that it is too often neglected). But above all, issues of security and ownership of this data are key. GAFAs, Google in particular, have understood the immense store of value that customer data represents, especially from a marketing point of view. They impose T & Cs on their free services (to private or business destinations) which allow them to get hold of this store of value. It is not insignificant that the valuation of digital “unicorns”, which is supposed to anticipate their capacity to produce cash over time, is based less on their turnover than on the amount of customer data they are capable of. to collect. This model has been proven to work for GAFAs, and underpins much of the supposed potential of the Internet of Things economy, where information gathering is central. But for free, or ridiculous prices, a good number of companies abandon the store of value represented by their client’s marketing knowledge and put themselves in danger in the medium term. We find ourselves in an absurd situation: in order to try to succeed in their digital transition, companies are feeding their main rivals of tomorrow (or even today, if we consider for example the worrying growing dependence of the media on Google and Facebook).
Data can therefore effectively play the role of digital economy currency under certain conditions.
Their liberating power is all the more effective when they are aligned with the company’s strategy.
They must be part of a quality and homogeneity approach that is essential to guarantee their role of unit of account.
They represent a store of value, as long as it remains in the possession of those who produce it (companies, or individuals), and is not captured in passing by those who handle it or immediately return it “actionable“.
It remains to be ensured that this currency, resulting from data capital, is powerful and credible. Confidence and fluidity play a crucial role here… But that will be the subject of a future article.
Mathieu Llorens is CEO and co-founder of AT Internet. Member of the Editeur College of Syntec Numérique and of the FrenchTech Bordeaux Strategic Committee, he was an associate professor at Bordeaux III University for 6 years and continues to speak in various schools and conferences.
AT Internet (formerly XiTi) has been offering Digital Analytics solutions since 1996 and has been recognized among the leaders in its sector by Forrester Research Inc. (The Forrester Wave ™: Web Analytics, Q2 2014).