There's most likely revenue growth potential buried deep within your organization. And it's entirely possible that neither you, nor anyone in your organization, know where to find it. Where are these assets hidden? Why are most of us so unaware of them?
By now, nearly every mature company has spent significant time and money implementing data warehouses and business intelligence tools in order to help identify trends and opportunities. In most cases these analytics help in improving processes, services and offerings, often shaving pennies off of the bottom line or helping to identify opportunities for incremental growth. While this kind of insight is valuable, the true hidden gems that can drive explosive growth are often overlooked.
These hidden gems are what I call "data byproducts." The monetization of these data byproducts through software is driving exponential revenue growth, market share, and client acquisition for the most innovative companies in the world. GE's dedication to capitalizing on what they call "The Industrial Internet" and Cisco's investment in driving the Internet of Things are just two well-known examples of companies looking to enable the next generation of data-driven products. To get an idea of the kinds of possibilities this untapped data could yield, a recent white paper from GE, suggests that the combination of networks and machines could add $10-$15 trillion to global GDP in the next 20 years.
What many organizations do not realize is that data byproducts are actually being produced through the natural course of any business. The data itself already exists. What's lacking is an innovative product mindset that allows organizations to see this data as a new, software-based product line.
Mechanics, for example, collect information about the services they perform on a car in order to provide better customer service. Grocers collect information about purchasing trends through rewards programs to gauge marketing campaigns and optimize product purchasing. Realtors collect information about the preferences of clientele in order to present them with the most compelling property. The data is already helping organizations make informed decisions about providing their core business. Leveraging this data in new, innovative ways can revolutionize entire industries.
Take the following two stories of businesses whose owners I am acquainted with, for example.
One is a highly respected services organization that, after decades of providing high-end, premium consulting within a niche market, realized that they had collected a myriad of data that could be productized and sold. For years this data had been used to assist in decision-making and to inform consultants of industry trends. By productizing this data and providing it to the market through a Software-as-a-Service business model, the organization was able to reach new clients that otherwise would never have been able to afford their premium white-glove service.
Another is a maintenance company that uses service records and strategically placed sensors to provide proactive notifications of needed maintenance to customers. By utilizing vast amounts of data about manufacturers, products and consumers, they are able to predict needed repairs before a breakdown actually occurs. The service drives new revenue while simultaneously building brand loyalty.
Historically the main purpose of data collection has been to optimize operations. IT systems help leverage data to provide transaction processing, purchasing recommendations, and customer support. Data usage is optimized through easy access and strong reporting capabilities. Strong data management combined with reporting leads to ROI through bottom-line savings. In other words, data is an internally focused asset, used to drive incremental profit to the bottom line.
In the digital economy of today - and the coming wave of connected products - data's impact can and should be significantly greater. Instead of driving incremental profit, data should be used to create brand new, highly-leveraged and profitable business models that result in exponential growth. Innovative companies are finding new ways to provide Data-as-a-Service to both existing customers and brand new markets.
Where do data byproducts fit into your strategy and how can you harness them to drive new revenue streams? If you haven't asked yourself that already, now would be a good time to start. By looking at your existing data in new, innovative ways, you may be able to find a hidden gem. Consider what insights you might provide to the market and explore the value of a Software-as-a-Service business model in providing them to new and existing markets.