Sure, data is valuable, but quantifying that value is difficult for most organizations.
In this episode of Data Mesh TV, we discuss how Data Mesh and data products can help drive a data monetization approach. We design data products for the consumer and we curate them so that they are secure, easy to use and share. Data products provide structure as well as consumer value, as such, they are a great place to start thinking about data currency.
Benefits of internal and external data monetization
Data monetization should be measured through the lens of internal and external value. Companies today can use data to drive internal process efficiency and to drive executive decisions. Business teams can also use data to discover and identify opportunities to grow revenue, reduce costs and/or manage risk. For many, the internal value lens is where we start and focus our data monetization exercises.
External data value is an opportunity that many organizations are chasing, but only a few are succeeding. Businesses have incredible amounts of data and they want to leverage those assets to increase the market value of the company and to generate new revenue streams. Of course, making data available externally presents new challenges. Data privacy and confidentiality risks, protecting intellectual property, and of course, building externally facing data pipelines.
YourDataConnect’s (YDC) background is in data governance. YDC brings a strong knowledge of what’s permissible when it comes to data sharing. Data sharing will depend on the industry and type of data, but more often than not, the data that’s sold can be anonymized and aggregated at a very high level. All personally identifiable information can be removed from the data set via masking or encryption.
Out of the two, internal monetization is far more common as many businesses are not ready or in the right industry for external monetization. Everyone can take advantage of internal monetization today.
Leverage Data Mesh as a framework to generate real, measurable value
Data Mesh is a great framework for data monetization. If you consider any currency model, whether its paper, commodities, or digital; they all require a secure structure, perceived value and the ability to transfer/share. You don’t have to be a monetization expert to appreciate that all of those are key for any model.
In a Data Mesh, data products provide structure, it is designed based on the consumer’s needs (value), and data products are sharable. If you have tried to create a financial number that defines the financial value for enterprise data, it feels impossible and any number will be difficult to defend. You need to break it up into smaller pieces and you need a consumer that can define why data is valuable. If you design a data product with a consumer in the room, you are in a much better position to define value.
Data Mesh is a great solution for data products to derive the maximum value of your data.
Reminder: consider total cost of ownership for data products
As organizations strive to assign financial value to data, consider the total cost of ownership (TCO) of a data product. TCO is very important to help teams make smarter decisions when building new products and for deciding how to build them. If data has a million dollar value, but it will cost over a million to develop it, that’s a problem.
Organizations need the ability to build fast data products, to simplify the process for iteration and change, and to keep the cost of consumption very low.