As the focal point shifts, access to cloud-based data solutions and almost unlimited computing power is delivering some highly articulate results. But concerns are rising around privacy and accuracy of the data held.
Indeed, notes Dobson, there is increasing general discomfort around organisations forming and acting upon deeper data analytics-derived insights into individuals. The opportunities for organisations to push the boundaries of what is acceptable here are a constant reminder that “technology leads and regulation lags”.
Says Dobson: “It’s a new frontier, and those who are accountable for delivering the insights have a huge responsibility to get it right, reassuring all stakeholders that the boundaries within which they are operating are appropriate.”
Levelling the field
Of course, availability of technology is not always followed by its adoption. In this respect, the utility that corporates can gain from data, either created in-house or imported from third parties, largely correlates with an organisation’s technological capacity and willingness to invest in leveraging data. The current degree of variance in technological uptake is noteworthy.
The Australian mineral and energy resources sector is particularly well-evolved in terms of technology and use of data, notes Dobson. This follows from the intensive automation programmes seen across the supply chains of major players, from extraction through to delivery. With drones and GPS-assisted self-driving trucks in remote sites, and the heavy adoption of the IoT to monitor progress, commodities could easily be considered a leader amongst all sectors in Australia. With the country’s iron ore exports alone accounting for 58% of a global US$66.6bn market, it’s not hard to see how optimising efficiencies can make a huge difference.
Many other sectors are just beginning their journey towards optimising data-usage. These players are not necessarily laggards and, for Dobson, “there is a correlation between sectoral appetite for data analytics, and the sensitivity of the data held by the sector”.
The highly asymmetric risk faced by companies holding sensitive data – especially given the new power of the regulators – has the effect of curtailing their desire to move too far ahead of the rule-book, he explains. “These businesses are as interested in being trailblazers as any other, but the consequences of non-compliance with data regulations can be severe.” As such, most ensure their investments in the area of leveraging personal data move strictly in alignment with the industry and the law, but as explained earlier, “technology leads and regulation lags” and so it is perhaps inevitable that they appear to be slow on the uptake.
Where freely given personal consumer data (as might be harvested by supermarket loyalty cards) is leveraged, Mahoney notes that it can drive revealing discussions around demographics, customer behaviours and loyalty. With more accurate insight than simple ‘gut feeling’ or customer anecdotal evidence, the effect can be to steer better decisions on investments in product development or business expansion, for example.
Exploitation of private personal data, such as medical or employment records, crosses the regulatory boundary but businesses in this space can still use generic ‘anonymised’ data to gain a deeper understanding of customers.
That said, as people become more aware of the power and value of data, there is an even greater effort towards securing their own privacy. Some of the recent highly publicised data breaches and the exposure of behaviours on certain social media platforms have sounded the alarm bell for many individuals in this respect. Where once they gave their data freely, a more guarded attitude prevails; people know and understand the rights afforded them by the regulators, and why those rights exist.
The development of open banking is also driving further awareness of the value of data, says Mahoney. “With the discussion comes a greater understanding of the consent management frameworks supporting the roll-out of APIs.” Increased adoption of IoT is also shifting market dynamics. This is a technology capable of generating vast amounts of highly specific data with which businesses can potentially target even the most niche areas of consumer life. Once again, as its benefits are explained, Mahoney sees it raising levels of awareness around how data is being used.
Commensurate with this greater understanding are the policy-driven initiatives designed to return rights to the individual. This is changing the dynamics of the relationship between data subject and data holder, but it is also helping to construct a solid framework of understanding for the digital age, enabling the next wave of innovation to push ahead – and businesses to leverage the new data economy in safety.
Riding the next wave
With 5G networks rolling out across the world, the capacity of data transmission is mounting. This, says Dobson, is empowering all stakeholders and giving rise to new sources of data. In the future data economy, he suggests machine-to-machine communication could be amongst the most powerful.
“Whether it’s for autonomous vehicles on the roads, automated medical procedures or a host of other possibilities, improvements in data transmission could open up industries where precision-machinery communicates in ways that, today, we can only dream of,” says Mahoney.
The nature of machine-to-machine data transmission may have a huge impact on the nature of commercial models and economies in general. As cutting edge solutions become commonplace, it will impact core commercial activities such as payments and collections. With real-time data, the rise of fractional or micro-payments begins to emerge.
Treasury tends to think in terms of end-of-day batch payments. But where the transmission method increases in velocity, so too does the data flow. This, suggests Dobson, will lead to a “profound change to the way commercial entities operate”.
Indeed, instant automated micro-payments could be made to suppliers based on devices sharing job completion data, potentially several times a day as a project progresses. With confirming transactions taking place at near-instantaneous speed, the velocity of commerce increases in parallel. Batch processing may be fine for now but the positive implications of real-time data exchanges for treasurers are significant in terms of liquidity and working capital management.
With the increasing speed of networks and data transmission, Mahoney believes that the power of data – and thus its value and price – becomes “inextricably linked to the solution providers capable of transforming data to solve real business challenges”.
However, rather than acquiring data assets en masse, or implementing a broad-sweep approach to the new data economy, he advises corporates to adopt a focused ‘use-case’ approach. Building a use-case first requires data to be extracted from the right sources – potentially challenging in a legacy environment. The data haul must then be transformed into value-adding information; appropriate platforms and in-house skills must be available to achieve this. The final high-level consideration is data distribution. This means getting the insight to the right place, at the right time, in the right format and in a secure and governed way.
For use-cases to succeed, and for businesses to engage successfully with the new data economy, it becomes incumbent upon each function to identify and understand their particular challenges or goals before deciding on the scale of investment. At this point, it is advantageous to work closely with external partners, particularly relationship banks who can offer an appropriate wide-angled view of the business itself and the environment in which it operates.
As the data economy gathers momentum, competitive advantage will most likely be found by businesses capable of leveraging internal and external data. Indeed, when it comes to making effective strategic decisions, driving operational efficiencies, and ensuring sustainable growth and innovation, access to the new king would appear to be vital.