Hello friend: I am here to give you a wakeup call.
You know that business you have been spending precious time and effort building for 5, 10, 20, 30, 50 or maybe even 100 years? You know, the one that builds widgets or sells professional services or has killer technology or does something that’s going to change the world or maybe something not even remotely close to any of that?
What would you say if I told you that this business produces a hidden source of revenue, some may even call it a secret product, that can help you make both your top line and bottom line numbers every quarter?
No, this is not #fakenews. It is true. Simply by existing, every company produces something called DATA, and it is time for you and your company to wake up and start monetizing it. As someone who has spent their entire career in and around data and analytics businesses, I assure you: there’s gold in them thar hills.
If you recall, not too long ago, gas prices were averaging close to $4.00/gallon nationally. As the economy slowed, predictably we all began to opine for alternate, and more cost efficient, ways to operate our vehicles.
Enter french fries. Backed by science, some enterprising citizens (including a few who also happened to be McDonald’s franchisees) figured out that by taking the leftover vegetable oil that restaurants used to cook french fries and other fast food, they could power their diesel engine cars almost as efficiently with only a few minor modifications. Astonished restaurant owners were more than happy to get rid of the used cooking oil and provided it to the car owners free of charge.
This became a big enough thing that the popular (and now departed) Discovery channel show, Mythbusters, did a segment on it. You can watch it here if you are interested (starts at 1:06 mark):
While, for a number of reasons, the vegetable oil-as-an-alternative-fuel-source market may not currently be a booming one, this parable does still illustrate something important: one person’s waste can in fact be another person’s gold.
We are just beginning the initial wave of a massive corporate movement to understand and embrace the use of data as an operating resource. The days of the words “big data” being thrown around meeting rooms as a catch phrase to impress your boss and your colleagues appear to be waning. It’s also no longer a hashtag marketers use on social media to get more people to look at their content.
Driven largely by corporate boards, the C-suite (especially the chief financial officer and chief marketing officer) and the increased availability of technological solutions, companies are now devoting significant resources to harnessing data (structured and unstructured) on their customers, their sales activity, their markets, etc. in order to make more informed decisions. Talking in terms of dashboards and KPIs (Key Performance Indicators) has gone mainstream, as has developing metrics to determine how company resources are allocated and how to vastly improve customer experience. This awakening has been slow, but it is a good thing.
Unfortunately, for most companies, significant short term and long term revenue opportunities are being missed in this process. The same strategic focus that is going into how to build a foundation to use data for internal decision making should, simultaneously, be devoted to how to turn the data that is being created by the business into revenue opportunities. Businesses like yours are structuring data, storing data, and starting to use and analyze data themselves, but they are not embracing that they are, in fact, creating marketable customer data, operational data, industry data, and transactional data as a high margin bi-product of their normal existence. This data is essentially used cooking oil — and there is a market of enterprising professionals out there that will find value in it to help power their businesses.
There are companies out there that are starting to get this idea and are embracing data as a way to transform their legacy businesses. One that immediately comes to mind is ADP. Established long ago as a manual payroll processing company, ADP has evolved over time into a full scale provider of human resources software and services, having relationships with “more than 650,000 clients…in more than 110 countries.”
As a result of this impressive global footprint, ADP happens to process and store massive amounts of payroll data across all industries. It gives them the ability derive unique insights found hidden in the bi-product of the core business they do better than anyone else on the planet. Recently, ADP decided to capitalize on the opportunity, and have released a data solution that allows them to position themselves not just as a leading service provider in their legacy space, but as an overall thought leader when it comes to understanding trends in areas such as personal income, real estate, and spending power globally. It’s smart and will likely open up a whole new, lucrative, high margin revenue stream for them.
Worth watching the video below to see how ADP is bringing Real Income data and analytics to market and delivering more value to their existing customers as well new customers:
ADP is just one example of a company that understands, embraces, and is committed to the idea that “every business is a data business.” But your company does not have to be old, large, or have a huge infrastructure to make this a key strategic initiative. Check out how Foursquare recently woke up to the idea as well. If your business is in need of a source of high margin income, there is little doubt that data, particularly data you are already creating, is the place to go.
In Part II, I’ll talk a little about how to go about identifying a market for your data (hint: check out this related spot on post from FirstMark Capital’s Matt Turck) and some keys to creating a real revenue stream from your fledging data business.