There will be nearly 30 billion connected devices in use by 2023. That’s more than three times the global population, and a dramatic increase from almost 19 billion just five years previously.9 The Internet of Things (IoT), fuelled by exponentially increasing volumes of data, improvements in sensor technology and processing power, is becoming part of our everyday lives. And it is enabling innovation and starting to reshape industries. Think of connected cars that notify loved ones in the event of a crash, or warn the parents of a young driver who breaks the speed limit. Imagine connected homes that allow you to adjust the lights and heating and answer the doorbell from your mobile phone. Consider connected machines that enable precision farming, by monitoring moisture levels, wind speed and air and soil temperatures across vast areas. Thanks to global connectivity and the ‘datafication’ of everyday life, information has become a key enabler of value creation. We routinely produce rich data trails on just about everything: from our location and online purchases, to our browsing habits and social media ‘likes’. At the same time, data is opening up. Open Banking initiatives point the way to unlocking new value creation opportunities in Financial Services and beyond. Across the energy sector ecosystem, open data is being introduced to stimulate innovation and help enable the path to Net Zero. Open data is also gaining traction in healthcare, as a way to improve patient outcomes and efficiency across the sector. For example, in the Netherlands, Philips has launched a portal on which hospitals can share patient records seamlessly and securely, helping them balance patient loads while safeguarding individual privacy. We can expect new sources of open data to spark innovation across sectors. Wind farms are already using industrial data to optimise wind power; and intelligent mobility services provide real-time, public-transport occupancy updates.
"The Internet will disappear. There will be so many IP addresses, so many devices, sensors, things that you are wearing, things that you are interacting with, that you won't even sense it. It will be part of your presence all the time."10
Eric Schmidt, Former Google and Alphabet Executive Chairman
As the reach of open data extends, organisations will have richer data, aggregated across multiple touchpoints, enabling them to deepen customer relationships through personalised experiences.
Data-driven Value Creation
More open data will mean greater scope for organisations to deepen their customer relationships by offering increasingly personalised experiences. As disparate datasets are combined at lower marginal costs, firms can proactively optimise and target their offerings based on users’ real-time actions, preferences and behaviours. Whether its Amazon’s “frequently brought together” prompts, Nike’s sneaker customisation platform, or Atom Bank allowing customers to customise the brand and logo, personalisation is vital in building connection, differentiation and trust. As the reach of open data extends, organisations will have richer data, aggregated across multiple touchpoints, enabling them to deepen customer relationships through personalised experiences. Spotify’s data-driven algorithm suggests artists, playlists and new releases based on each user’s demographic, location and listening history. Uber gives air passengers the facility to arrange a car to the airport at the tap of a button in their airline’s app, by sharing data with trusted airline partners. We’re heading towards a future where customers are effectively treated as a ‘segment of one’, getting exactly what they want, when and where they want it, through an authentic and differentiated experience. This won’t happen overnight, but the businesses that move fastest will create engagement, loyalty and returns. The value of open data goes beyond personalised and convenient experiences. Analytics-based insights are helping leading digital organisations make more informed decisions. This enables them to strengthen the resilience of their operations, optimise cost and become smarter at allocating finite resources. Digital twins, based on data from the physical world, allow organisations to perform predictive maintenance of products and machinery. For instance, utilities providers can embed sensors gas and water mains and electricity pylons, feeding performance data into a digital twin in real time. That makes it possible not only to predict faults and leakages, but to adapt service and maintenance plans to meet different customer needs.
What should you be thinking about now?
- How can you leverage open and connected data to become a more insight-led organisation?
- How can you increase create customer engagement, loyalty and return through data-driven personalisation?
- What your is data proposition?
Privacy and Cybersecurity Pitfalls
The proliferation of open data is a double-edged sword, however. It is reliant on the open exchange of individual, behavioural and transactional information. As datafication has grown, so have concerns among consumers – and regulators – over the privacy and control of personal data. Almost three quarters (74%) of people feel they have little control over how their data is used.3 Massive data breaches at the likes of Facebook and Microsoft (which affected over half a billion accounts) will have done nothing to reassure them. If they don’t like what’s happening to their data, consumers are willing to vote with their feet – as WhatsApp found at its cost. The messaging app shed users to competitors Signal and Telegram after announcing that it would share their data with parent company Facebook.12 So where could this take us? Innovations such as personal online data stores could become mainstream in the next five years, enabling customers to take control of their own data. Information on their browsing habits, purchases and media-streaming history could be locked inside an individual ‘data safe’, with owners granting permission for companies to access to it for specific purposes.13 Regulation will also drive change. In recent years, leading tech companies have received huge fines for data breaches. The EU has proposed sweeping new rules governing how technology firms operate. And in the US, there’s an appetite on both sides of the political divide to regulate the sector – once more surfacing the threat of breaking up Big Tech companies. As organisations increasingly exchange data to enrich customer experiences, they will come under mounting pressure to be transparent, purposeful and trustworthy. Customers want to understand why their data is needed, how it’s being used and secured, and what they’re getting in return. Businesses will need to make the value exchange clear and compelling. Increasingly over the next five years, customers will want to know how their data is used and what they’re getting in return. But here, too, lies an opportunity. How companies handle and protect customer data can be a point of competitive differentiation. Apple puts data privacy and protection at the heart of its value proposition. Its commitment to privacy and security has shifted the essence of its brand promise, from cool tech and slick user experiences to trusted data steward. This gave the firm the licence to launch its digital wallet, Apple Pay, and partner with banking giant Goldman Sachs to issue its branded credit card. The result: additional revenue streams for a digital business that’s already firmly among the winners. But there’s another threat on the rise. The growth of open data and data portability means that the scale and sophistication of cyber threats are at an all-time high. And they will only intensify. Examples are everywhere. Hackers accessing Amazon Alexa and Google Home, listening to conversations, and misleading users into handing over sensitive information does little to settle the nerves.14 Increasing numbers of devices, greater volumes of sensitive data and increased connectivity all exacerbate the cybersecurity challenge. The risk of compromise, and the value at stake, are higher than ever.
11 Ponemon Institute: Privacy and Security in a Digital World 12 https://www.bbc.co.uk/news/technology-55634139 13 World Economic Forum: A New Paradigm for Business of Data 14 ZDNet: “Alexa and Google Home devices leveraged to phish and eavesdrop on users, again”.
Increasingly over the next five years, customers will want to know how their data is used and what they’re getting in return.
What should you be thinking about now?
- How will you let customers know what you’re doing with their data, and how it benefits them?
- How can you strengthen your cybersecurity capabilities to build trust among your customers and partners?