Is data really the currency of tomorrow? (2/2)
The relative power of data
As we saw in a previous article, data can create value by fulfilling the three functions of money (unit of account, store of value and discharge). But it is interesting to continue the analogy by asking what gives a currency its strength and allows it to effectively fulfill these three functions under the best conditions. Indeed, all currencies are not equal. Pokémon cards are at the same time units of account (VP, Ex etc.), stores of value and they have a phenomenal liberating power in playgrounds. But we may prefer euros or dollars to them in certain circumstances. The same goes for data. So how do you ensure that the data collected and generated has a value closer to the euro than to the Pokémon card?
The strength of a currency is based on two key characteristics: trust and fluidity, and here too the analogy with data works perfectly. But unfortunately trust and fluidity are all too often neglected and jeopardize many digital strategies that pride themselves on being driven by data.
Trust first of all. The etymology of “fiduciary” and “trust” recall their common “fides” origins, faith in Latin, while “credit” comes from “credere”, to believe. In the absence of confidence in its liberating power or in its persistence over time, the value of a currency collapses. The most spectacular example was the hyperinflation in Germany in the 1920s, today the Pound is under the worry of Brexit. For data, the loss of confidence (and therefore of value) occurs at several levels:
Confidence in the consistency and reliability of the data. The multiplication of analytical tools, the impossibility of homogeneously measuring the different media (Web, application, offline), the lack of certification, or simply the poor quality of collection and storage still too often ruin the confidence of decision-makers in the data presented to them. For truly strategic decisions to be informed by data, it is imperative to ensure the credibility and persistence of the figures, their strength of conviction depends directly on it. It is not reasonable to seek to convince a management committee with DIY tools, not exhaustive (sampled), and incomparable, unverifiable, uncertified indicators.
Customer trust. The data collected, before belonging to the company that collects it, belongs to the users of the service, to the customers. It is imperative to work with confidence with them otherwise they will eventually turn away from the service in question. Respect for privacy is not only a legal constraint that should only be tightened, particularly via the GDPR. (link in English here). It is also the condition sine qua non of the contract which must bind the company and its client. Accessibility, transparency, security and proportionate use must frame the use of customer data in order to ensure that it will be usable and will retain its strength over time.
Confidence in your technology providers. The development of SaaS services and cloud storage generalizes the use of third-party analytical tools. It is therefore essential to be sure that your technology providers do not reuse your data for uses that would completely demonetize them. A frequent example is to feed DMPs allowing the development of targeting algorithms that will then potentially serve the entire market (and therefore your competitors), while breaking the contract of trust with your users. In this case, the value of your data first enriches your service provider and deprives you of a competitive advantage. The most absurd example, and the most frequent, probably consists in dumping its customer data on its main competitor who can take advantage of it to strengthen itself at your expense (cf. the ubiquitous situation of the media using analytical or intelligence tools Google marketing, but I will admit I probably have a partisan opinion on this). In addition, not only is the liberating power of data diluted, or even transferred to a competitor, but in addition the latter can read open book in your digital accounts. And as the icing on the cake, you increase tenfold the previous risk related to respect for the privacy of Internet users. The European Commission, via Margrethe Vestager (@vestager), and Fortunately, many leading newspapers are starting to take up this sensitive issue. These are sovereignty issues that concern every company but go well beyond them in fine and reveal serious political and social issues.
Fluidity is the second characteristic of a strong currency (and data).
The etymology explains the evolution of currencies whose power was initially limited to restricted areas and exchanges. The “capital” derives from “capita”, the head of cattle, while “pecuniary” comes from “pecus = the cattle”, because originally the herds represented the main wealth on which to calibrate the goods. Suffice to say that the risks of high frequency trading were limited. The power of money in trade was multiplied as it became lighter, passing from the metallic coin, to scriptural money, and finally became completely dematerialized. But it is the same for data. The faster they can circulate, in good conditions, the more their value is increased tenfold. If we can ensure the triple trust mentioned above (reliability and security, especially for privacy), data gains value when it can be exchanged and arrive quickly, unaltered and safely at destination. Concretely, to ensure the fluidity of the flow of data, it is necessary:
To provide bridges between collection and the various possible uses. APIs thus play an absolutely fundamental role and are as important as the processing and calculation capacities on which the attention is too often focused.
Not to be locked into proprietary systems. Large dominant systems naturally seek to force their customers into closed ecosystems, by promising greater fluidity, but necessarily limited. The most open systems possible should be favored. A currency whose use is limited to a playground is not very powerful, however large the playground … In addition, and it may seem paradoxical, these closed systems are much more dangerous for the privacy of Internet users because they increase the risk of opaque crossings. It is obvious to anyone who knows the world of data that Google today has a frighteningly intimate knowledge of all Internet users on the planet (except China and Russia perhaps…).
To offer end users readable and easy-to-use interfaces. The democratization of data is underway, and progress in this area has been spectacular. It remains to ensure that the connectors between the collection and visualization and exploitation tools are effective. This is often where the shoe pinches. The data visualization interfaces are superb, but the data unreliable and homogeneous.
In conclusion, data can be the currency of the digital world, but it must be treated as such. You have to be able to trust it, guarantee its fluidity, consistency and durability. It is also necessary to take into account its three functions and not to despise its descriptive character, which is primary, under penalty of rendering its other functions toxic.
Finally, let us remember that minting money has always been a royal prerogative, whoever controls the issuance and distribution of money has decisive power. Data governance is therefore a major sovereignty issue. Outside the company, it is imperative not to leave to external suppliers, in particular the GAFA, prerogatives without control over this source of value. Within the company, those who will control access to data will naturally take more and more strategic positions.
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).