Catch the Wave: Value Creation Through Data Sharing
The unexplored territory and next wave of data value creation will be those companies that most effectively share data up, down, and across their business but more importantly between the company and its customers.
A simple rule for business is that if an input to production costs less, management will use more of it, and if an input costs more, a company will use less of it. In 1980, the hard drive cost per gigabyte was $1M. Today, it is less than 10 cents. As marginal cost of storage approaches zero, system designers no longer need to limit the volume, velocity, variety, or history of data being stored and have pushed through these former limitations with a voracious appetite. As a result, there are over one trillion business transactions processed every day and stored in online transaction processing (OLTP) databases around the globe. CIOs have accomplished this amazing feat and will continue to drive increasingly more efficiency into their companies’ operating models by reducing cost-per-transaction. But, beyond a certain point in this efficiency, Wall Street yawns.
To get a glimpse of future value creation from collapsing storage costs, look no further than Dropbox. Their market value is not based upon being a low-cost storage provider. Its business model is based upon dramatic growth fueled by new forms of data sharing. It took the online storage service provider about four years to accumulate its first 100 million users. But after accumulating this initial mass and by continuing to ease and improve sharing capabilities, it took just 10 months to add the next 100 million. The significant growth of Dropbox has been driven in small part by its ability to offer inexpensive cloud file storage but in large part by enabling new forms of collaboration and data use through its features to easily sync data between multiple users and devices. Ongoing investment by Dropbox is directed at introducing new, easier ways to get data in and to share it more broadly on more platforms.
We know that data is frequently locked inside a company’s functional silos where the information flow between systems is narrow and unidirectional. Making this flow increasingly inexpensive is now a diminishing source of value. New value creation and business cases can happen only with new interactions driven through increased sharing of data — when sales interact with engineers; when product managers interact with customers; when companies facilitate the sharing of data between consumers. The unexplored territory and next wave of data value creation will be those companies that most effectively share data up, down and across their business but more importantly between the company and its customers.