Open Data Creates Value

English: The following diagram visualizes the ...

Attribution: By Anja Jentzsch via Wikimedia Commons

In a recent report, Gartner says that while big data is going to be a key driver for better decision making, open data will have a larger impact on value creation.

Many businesses find the idea of open data adding value to be counter-intuitive. Data is a significant asset to modern companies, and finding ways to monetize that data is recognized as an important factor in securing future revenue streams. Traditional thinking dictates that to make money from data, it must be considered proprietary and protected from being widely disseminated. One can think of data as analogous to code (which, after all, is just another sort of data). Traditionally, software manufacturers have sought to keep their code hidden and aggressively pursued those who stepped outside the bounds of their preferred licensing arrangements.

With the rise of the open source movement, a different ethos prevailed, where  code was made freely available to all, and contrary to the expectations of those who believe code must be protected, a massive amount of extra value was created within the ecosystem of software and services. Companies like Google, NYI, and many others, took the building blocks made available by open source software, and created successful businesses. The web would not be what it is today without Apache, MySQL, WordPress, and the multitude of open source applications that are available. Open source has led to innovation and profit.

Gartner contends that open data will have the same lifting effect on the available value within the data industry. Government organizations have been at the forefront of this trend. Opening their data and making it available through public APIs has increased transparency, reduced costs, encouraged information aggregation, and improved services. The value of data in protected silos is negligible when compared to the value of connected data.

Open data allows combined data sets to be developed, which improves the ability of decision makers to spot trends and patterns, make connections that were previously unavailable, and develop novel services. This is the ‘information network effect’, which Gartner claims increases the value of a data asset the more widely it is shared. Open Data creates

a level playing field where everyone can play a game that can evolve. There is a positive relationship between the openness of information goods (for example, code, data, content and standards) and information services (for example, services that offer information goods, such as the Internet, Wikipedia, OpenStreetMap and GPS) and the size and diversity of the community sharing them.

That evolving playing field is where new business opportunities develop, as they have in the world of open source software.

What do you think? Is the ‘information network effect’ enough of an incentive for businesses to open data and provide public APIs, or are companies like Twitter and Craigslist right to restrict their APIs and limit access to their data?

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