Data Monetization: The Further Away Your Data, the More Distant Your Profits

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In a recent study, Gartner highlighted a growing trend: IoT Data Exchanges. These emerging information brokers (e.g., Caruso, DataBroker DAO, and Terbine) will offer IoT data owners the opportunity to sell their data on the open market.

In 1995, selling physical goods to strangers through the World Wide Web was the “Holy Grail” of digital business, today it’s selling data to people you don’t know.

In 2017, I co-authored an article in MIT Sloan Management review, What’s Your Data Worth?, which says most companies do not recognize that their data holds any value at all, let alone that it is possible to turn a significant profit selling it.  As owners of IoT data, this means that over time, they must enter the age of data valuation.

Just like learning any new language, it takes time to become fluent in IoT data valuation.

In the meantime, however, there is a very practical piece of advice that will pave the way for maximizing data returns: keep your data close until you understand its actual value.

While this seems like common sense, it runs counter to the prevailing “wisdom” currently practiced in the industry. Operations technology (OT) data owners often start their IoT journey by first shipping data to a public cloud. Once the data has been moved to the cloud, OT developers can experiment with a variety of IoT services and leverage a rich set of APIs.

While this process certainly helps the business climb the learning curve of what’s possible with their data, it has the unfortunate and unexpected side effect of creating “data taxes”: significant costs that eat away at the potential profits earned by selling the data.

Consider an example of thermostat data sent from the factory floor directly to a public cloud. For the sake of illustration, let’s assume that this thermostat data could fetch $1/GB on the open market.

Public cloud providers will not charge a “cover fee” for moving the data into the cloud, but subsequently there are a wide variety of data taxation fees that will corrode profits. Perhaps the most egregious fee is data egress, moving or copying the data out of the cloud during the selling process.  It is not uncommon to pay 10 cents on the dollar for data egress fees; reducing the revenue impact for IoT data in this instance by 10%.

What is the best strategy to avoid crippling data taxes? Keep your data close.

OT teams should deploy open-source and vendor-neutral data capture plumbing, as close to the source of the sensor data as possible.  The use of open-source data management technologies reduces taxes and gives OT data owners the flexibility to realize more of the data’s value when eventually negotiating a price with data brokers.

To keep IoT data close to the source and maximize its value, follow these three guidelines:

  1. Use open-source, standard frameworks like EdgeX Foundry for data gathering.
  2. Use open-source, standard frameworks like Akraino to manage the infrastructure upon which the data locally resides.
  3. Learn how to write and deploy local applications that analyze and prepare the data for sale.

Don’t let data taxation derail your journey to the Holy Grail of digital business.

About the Author

Steve Todd is a software engineer and inventor for Dell EMC with over 170 patents granted by the USPTO. He earned Bachelors and Master’s Degrees in Computer Science from the University of New Hampshire. His inventions have generated tens of billions of dollars in revenue for Dell EMC. Steve is a Dell Technologies Fellow and currently serves as the Vice President of Strategy and Innovation of the IoT and Edge Solutions Division, with a research emphasis on multicloud solutions, data value, and blockchain.


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