Data has become a large part of our everyday life, helping us in determining the best possible outcomes and influencing how we make decisions. Firms have been able to start capitalizing on this massive resource through expanding their Big Data analysis departments and increasing their ability to target certain customers using this data. This has brought data to the forefront of industry news and has turned it into the world’s most valuable resource, leap-frogging even oil.
Firms dealing in the internet and data collection and analysis are the new Standard Oil and Carnegie Steel of the digital era. Excluding Berkshire Hathaway (number 4 and an investment firm), the top 5 companies in the world by market capitalization are Alphabet, Apple, Amazon, Facebook, and Microsoft, all data processing companies bringing in massive amounts of revenue. Just as oil was a major economic driver in the 20th century, exploitation of data is shaping up to be one of the major economic drivers of the 21st century.
The ability to collect data from devices such as “smart” refrigerators and washing machines, is increasing and giving companies ever-expanding insight into the habits of consumers. This increase in the amount of available data will allow companies to more efficiently allocate their resources to fund what customers want instead of what firms think that customers want. This data collection and analysis also allows companies to cut down on their costs through an increase in production efficiency, optimization of asset use, and a more efficient supply chain. Monetization of these efficiency increases occurs through identifying new applications for existing products, making marketing and product placement decisions better, and even licensing out company-obtained data.
Data collection and interpretation has blown up in the past decade or two, and has become an integral part of our lives, giving rise to companies that have stimulated our economy through increased consumption, new technologies, and increases in labor efficiency. These companies also give us an increased quality of life, just as Standard Oil and Carnegie Steel did at the turn of the century. These industry titans have helped producers expand to reach new markets and improve economic efficiency and will continue this trend through the foreseeable future.
The Rise of the Data Economy: Driving Value through Internet of Things Data Monetization: A Perspective for Chief Digital Officers and Chief Technology Officers, Albert Opher, Alex Chou, Andrew Onda, and Krishna Sounderrajan, IBM, 2015