Is data the currency of the future?

-Tanmay Suresh Redhu

As little as twenty years ago, information was transmitted through ancient PBX systems, newspapers and cable television. The advent of the internet and our subsequent reliance on it for everything means that society’s most essential functions have quickly been digitized. Today enterprises accumulate data at ever-rising volumes and ever-rising velocities. Whether you’re talking about data from corporate systems, the Internet of Things, or social media, the flow never stops. While it brings its share of challenges, this constant stream is actually a good problem to have. There is intrinsic value in all of those bits and bytes.

Nobody seems to doubt this bottomless source of value for users, companies and governments. Take any adjective (smart, big, small, open, actionable), place it before “data”, and you’ve got the start of a successful business plan. But let’s be pragmatic and consider the value of data with regards to money – the ultimate store of value. Can data really be compared to money? And if it can, how can we ensure its strength, integrity and liquidity?

Let’s go back to the basics (and to Wikipedia). Aristotle defined money as serving these three purposes:

•    As a medium of exchange (or legal tender)

•    A unit of measurement

•    A store of value

How can data fulfil these three monetary functions?

Data as a legal tender

In the strictest sense, data’s power as legal tender is rather limited, excluding the companies who directly sell the data collected via their platforms – these are mostly companies offering free services or content with a view to monetise via advertising.

...There are a great number of efficient examples: Data can enable complementary sales (cross-selling and upselling), better targeting and therefore better ROI on ad investments, better resource allocation (stock, production, etc.), better marketing targeting in general, and many more examples.

...When data is collected just because it’s “collectable” (and you never know, they say data is the new oil, after all), it is nothing but a cost center, and inversely reduces the legal tender (in other words, the cash) available to companies.

Data as a unit of measurement

This function refers to the descriptive aspect of money and applies very well to data in all its forms. Without money – and without data – it’s impossible to evaluate relative values and make intelligent business decisions. Money makes it possible to compare, to go beyond the subjective, by providing a common reference point. Money makes it possible to compare diverse and dissimilar elements, and put them into perspective. Data can and must play the exact same role. There’s a tendency to seek data that’s systematically actionable and to look down upon data that’s only descriptive, or for simple reporting purposes. But we must be wary of this tendency to want to run before being able to walk – it’s the most likely way to trip and fall. We must first ensure that our data correctly depicts the reality upon which we’re supposed to act.

In this era where digital is tipping the balance, where each person seeks to understand what the future holds for his or her industry, it’s critical to bring order and certainty to the measurement of our actions (and let’s not count too much on the Internet giants to be concerned with rigor and transparency here). Quality data (and quality money) possess this precious ability to describe a value, make this value comparable, and in doing so, certify this value.

Data as a store of value

This third function of money refers to its capacity to transmit spending power over time – a standard of deferred payment. This function is debatable when we’re dealing with data. Some data expires very quickly, whereas other data gains value over time if it has been correctly collected and stored. Web giants like Facebook, Amazon, Apple and Google in particular have understood the immense store of value that customer data represents, notably from a marketing point of view. They impose terms and conditions on their free services (meant for individuals or companies) so they can help themselves to this store of value. It shouldn’t go unnoticed that the valuation of digital “unicorns”, intended to predict their ability to generate capital over time, is based less on their actual revenues and more on the quality of the customer data they’re able to collect.

This model has proven fruitful for the giants of the web. But in exchange for a free or very low-cost service, a good number of companies abandon the store of value to be found in their customer knowledge, and in doing so, put themselves in danger in the medium term. We thus find ourselves in a rather absurd situation: In order to successfully navigate the digital shift today, companies are feeding their competitors of tomorrow.

Data can therefore effectively occupy the role of money in the digital economy, under certain conditions:

•    When aligned with business strategy, data will be even more efficient as legal tender.

•    To guarantee its role as a unit of measurement, data must be approached with quality and consistency in mind.

It is rightly said that ‘Data is the currency of the future and that future is now’