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Data asset monetisation is much more than a revenue stream

Monetising data assets is much more than creating revenue streams. But how should CFOs use it to unlock above and below line benefits to maximise profitability for their organisations?

Data asset monetisation is much more than a revenue stream

Many businesses collect and hold an enormous amount of data without fully understanding its purpose. As marketing blogger, Michael Palmer, puts it “data is just like crude [oil]. It’s valuable, but if unrefined it cannot really be used”.

Unfortunately, only 12% of CFOs believe that their organisations are mature enough to deal with the data connectivity, data interoperability, and data architecture issues that will allow data asset monetisation, says Aneel Delawalla, senior managing director, Global CFO Agenda at Accenture.

This means it is unlikely to be on a CFO’s radar.

“Traditionally data has not been considered an asset”, explains Lydia Clougherty Jones, senior research director, Data & Analytics Group at Gartner.“There’s a huge demand for organisations to be profitable and so leveraging all the assets, including data, is very top of mind for executives and board of directors”.

Dennis Johnson, CFO at Qlik, says identifying what monetising data means is key to CFOs being able to discern value. “Data monetisation is thought of as selling data, however, for CFOs it’s about creating measurable value from data”, he says. “Data sharing to drive better business terms” or improving efficiency with external partners, such as supply chain.

Understanding the data monetisation landscape

From capitalising on novel revenue streams to optimising internal efficiencies and embracing collaborative data ventures, CFOs could be at the forefront of unleashing the full potential of data.

“When people think of data asset monetisation, a lot of them think about new revenue streams”, explains Delawalla. “[But CFOs] could also create internal efficiencies, optimise working capital, using data to improve equipment downtime, equipment maintenance costs” or even use data to understand what customers they should be targeting.

According to Gartner’s Clougherty Jones, data asset monetisation can take various forms, ranging from simple data licensing for generating revenue to data sharing in exchange for acquiring necessary data. While in the past, sharing data with competitors was unimaginable, nowadays, many industries engage in such collaborations, cautiously excluding any sensitive or proprietary information.

Graeme Rodd, CFO at Anmut, elaborates on the vast potential of data monetisation, highlighting its applicability across diverse domains like customer data for cross-selling and upselling, financial data for informed decision-making, and product usage data for enhancing research and development.

“But monetising data requires upfront investment in data, people, and processes. The challenge is identifying the data assets that are worth that upfront investment,” he says.

However, if done correctly, monetising data assets can provide incredible benefits to the efficiency and profitability of a company. Improving internal operations, using data from a consortium to train ML and AI models, creating data products (data-as-a-service, insights-as-a-service), fraud prevention, as well as many others.

Innovative strategies for monetisation

Under the banner of data monetisation, various innovative strategies emerge, offering compelling possibilities.

According to Johnson, avenues like “data-as-a-service,” data marketplaces, and embedded analytics enable businesses to share insights seamlessly within workflows for internal teams or external stakeholders. AB InBev exemplifies this approach, leveraging IoT data analytics to understand shopper behavior and optimise product placement without directly selling or licensing data.

However, Delawalla stresses the importance of understanding the overarching purpose of data usage. “You have faster data and more real time data that allows people to now monetise speed, [but] are you using data to surface bottlenecks and trapped value, and therefore helping to improve efficiencies?” she says.

Another option is to share data with a consortium in order to create better insights for the industry as a whole. “Across [various industries] CFOs can take advantage by looking for commercial uses that align with a purpose that the corporation cares about, [e.g.] mitigating fraud”, explains Clougherty Jones.

By contributing data in the fight against various types of fraud, CFOs can significantly decrease organisational risks and create added value. Yet, it is crucial to bear in mind that data sharing carries inherent risks, affecting both businesses and the customers they serve. Navigating these approaches skilfully allows CFOs to tap into the true potential of data monetisation while responsibly managing associated challenges.

Ethical considerations and privacy frameworks

Almost everyone has been victim to unscrupulous companies selling data to third parties, resulting in endless, intrusive junk mail or nuisance phone calls. Regulations, such as GDPR, help to curb this practice, but it has, unfortunately, given many people a negative view of monetising data.

“You should always consider the full chain of ownership before sharing any level of data and ensure you have the right technology infrastructure in place to safeguard how and where data is going to be used”, explains Johnson.

Rodd notes Meta were just fined €1.2  billion for storing the data of EU citizens in the US. There are a few factors to consider when considering what data can be monetised – whose data are you selling, is it anonymised, are you respecting people’s right to privacy, and is it legal to sell or licence the data within a certain territory?

It is essential to consider the risks of inadvertently violating privacy within the organisation itself. Clougherty Jones warns against using data generated by AI systems that may present legal risks. “Using data from [generative] AI can create some unnecessary risk that a CFO is definitely going to want to stay away from”, she says, noting using data that was sourced illegally, even if you were not the one to source it, could still leave you open to legal issues.

Despite the regulatory landscape, the intent is not to discourage data monetisation. “A lot of the privacy regulations are designed to foster data sharing, we’re seeing a lot of data strategies encouraging more data sharing, including personal data sharing”, says Clougherty Jones. “My advice is to not shy away from opportunities of leveraging personal data [but] to drive revenue while meeting the demand for highly personalised products”.

When deciding which data to monetise, best practices include evaluating the use case and overall benefits, such as enhancing products or preventing fraud, while carefully weighing potential risks like privacy invasion, cybersecurity threats, and safeguarding proprietary information. Ethical data practices and privacy protection remain essential pillars for companies venturing into the data monetisation realm.

Unlocking value

As always there is a risk and reward of data asset monetisation, but incredible benefits to be unlocked by savvy CFOs. “On the cost-side, bad data has an enormous hidden cost … [such as] cleaning data. There’s enormous financial value to be gained from just improving the right data assets”, says Rodd.

Moreover, investing cleverly in data assets can align with the business strategy and create opportunities to unlock value. Anmut’s success story exemplifies this, as they assisted a client in optimising their supply chain through data-enabled processes, leading to an impressive £250 million increase in net working capital.

In today’s data-driven society, CFOs are encouraged to capitalise on this invaluable resource. Even well-established businesses with vast historic data reserves can benefit from this initiative by leveraging their data’s insights effectively.

To fully harness the power of data, CFOs should assess their data holdings and discern how these insights can enhance various business functions. Understanding the internal use of data can help to influence how future data streams are captured and will allow the business to accelerate their ability to monetise that data going forward.

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