Insights / Blog Your Data Ecosystem | Asset or Liability? June 24, 2020 Your Data Ecosystem Today, almost every company is a data company. Applications, operational processes and strategic decisions rely on a supply of high-quality, reliable data. To deliver value, that supply must navigate through a complicated network of people, processes and technologies. That network is your data ecosystem and it affects your entire organization. This raises critical questions about your data ecosystem: Are you able to manage it?Is it an asset or a liability?Are you maximizing the value of your data? Answering these questions is crucial given the ubiquity of data, its importance to modern organizations and the role it will increasingly play in delivering a competitive advantage. How It Began For most organizations, their data ecosystem has developed organically over a long time to meet ad hoc needs. Data was first created when we adopted computers to execute processes. We then moved that data to analytics environments to provide insights. We then embedded insights into applications to enhance those same processes. If we didn’t have the data we needed, we sourced it externally…the data industry began to grow. Then we digitized our organizations and interactions and generated more data than ever before. So did our customers, partners and suppliers. Data became ubiquitous. Machine Learning and AI have become increasingly feasible, but require large quantities of diverse data from reliable sources. Much of that data has to come from outside your organization as the need for context increases inline with our global interdependence. This means transacting more data. It also means building and maintaining trust through secure collaboration. The ecosystems we use to manage the supply and demand of data for our organizations have hardly been acknowledged, click to tweet. In most cases, they are ill-equipped and under-prepared for the task facing them today, let alone tomorrow. A Hidden Liability? Developed organically, most data ecosystems are hidden liabilities that fail to meet the data needs of a modern organization and perpetuate the 80/20 data dilemma. A good way to assess this is to look at the characteristics of your data ecosystem. Do you know what it contains? This could be as simple as a list of relationships, details of what is being exchanged and the relevant technical mechanisms. For many organizations the answer will be ‘no’, or there will be many different lists in many different places. Updated manually, out of date and difficult to reconcile. Do you understand it? Knowledge is also likely to be dispersed. Legal manages the contracts. Finance manages the invoices. IT sets up and maintains the data movement. Application owners build and manage inbound and outbound feeds. Data engineers, scientists and analysts prepare, model and use the data. People understand parts of it, no one understands all of it and collaboration is minimal. Can you manage it? Do you have the necessary information and capability to make changes and manage the impact? If you had to deliver an objective like reducing costs, consolidating relationships or driving standardization are you able to achieve it? Do you even know where to begin? Is it efficient? If data is a crucial raw material for your organization, the supply chains associated with it need to be efficient. If they’re not, you’re not. An efficient data ecosystem delivers data fast (minutes, not months), is measurable, repeatable, and ideally automated. There are unlikely to be multiple hand-offs or manual processes. Is it getting better? Is the time, cost and risk associated with your data supply chains better than it used to be? Can you even measure that? Or, has the situation remained the same while demand, opportunity and risk have all increased? Hopefully, it has not deteriorated, just at the point where it has become more critical than ever… For most organizations, their ecosystem will be highly dispersed, with little transparency and few reliable performance metrics. This will create inefficiencies and significant excess cost. An unmanaged data ecosystem will stifle innovation, complicate projects and reduce profitability, click to tweet. A Business Asset? The reverse is also true. A well-managed data ecosystem can be a strategic asset for your organization and a competitive differentiator. Many of the world’s most valuable companies (e.g. Google, Facebook, Tesla, Apple, Amazon, etc.) are those that have best understood and optimized how to extract value from their data ecosystems. In many cases, these businesses have also developed platform-based business models on top of their data ecosystems, bringing third party suppliers and consumers into contact with each other either within a platform, or through a gated interaction. Whilst some companies, and their valuations, are inextricably linked to their data ecosystems, any organization can turn their ecosystem into a strategic asset simply by investing in the following: Making it manageable This doesn’t mean a large inventory or remediation programme, it simply means knowing enough to identify opportunities and make informed decisions. Knowing the relationships and data involved is a great start. Ensuring data about interactions and transactions is captured will help to understand what is happening and identify opportunities for improvement. Educating your organization Like any system, data ecosystems are organisms that don’t necessarily behave the way we want or need them to. A shift in mindset is needed to agree what good looks like, so they can collaborate. The relative importance of different objectives such as cost, risk and time must be understood, so people can work cohesively. Ultimately, it’s people who deliver value from data, click to tweet. Helpful technologies Using technology to understand and manage your ecosystem makes sense and will help you to solve real-world business problems. Try to avoid investing in technology that adds complexity by creating new data silos or claims to solve the problem through yet another aggregation. Helpful technologies don’t seek to monopolize data, they play well with others and make your data more portable, click to tweet. Hidden Potential When making these changes, you will know if you are being successful. People within and outside of your organization will be able to quickly find and access the data they need with little or no friction. There will be a high level of trust. Collaboration will become pervasive. The ecosystem will start to function optimally. The time, cost and risk associated with acquiring and supplying data will be understood and can be managed in line with business objectives. All the applications, operational processes, and strategic decisions that rely on data will become more efficient and more effective. Your organization will finally have the raw materials it needs to be effective in a data-driven world and will become more successful. But there’s more. A well-managed data ecosystem, coupled with the right technologies, provides the foundation for new revenue opportunities and business models, click to tweet. Creating and maintaining data supply chains within and outside your organization forms the basis for monetizing data assets, including data, models, and insights. Taking an ecosystem approach creates trusted relationships where others can monetize their data assets. With the right technology, your data ecosystem provides the foundation for a platform-based business model that you manage and operate. Many of the world’s most successful organizations have already done that. Investing in your data ecosystem presents an opportunity for future success, while also delivering immediate value, click to tweet. Co-authored by Anthony Cosgrove (Co-Founder) & Sebastian Drave (Chief Data Scientist) at Harbr.