Mar

16

Data is a Commodity, Analytics is not a Solution

Filed Under B2B, Big Data, Blog, data analytics, Financial services, Industry Analysis, internet, Publishing, Search, Thomson, Uncategorized, Workflow | 1 Comment

This will only get worse. The latest announcement from the Thomson Reuters GFMS service, the premier data analytics environment around gold and silver, indicates that their Copper commodity service on Eikon now moves from mining company to mine by mine performance. “It all adds another data-rich layer of fundamental research to our customers’ copper market analyses” says their head of research. And there, in that line, we have a “fundamental” issue that lies behind the torrent of announcements we see in the B2B sector at the moment. Think only of Verisk buying Wood Mackenzie last week at a price which went well beyond the expectations (17X ebitda) of counter bidders like McGraw Hill, and which shocked private equity players who relish the data sector but find it hard to imagine 12X as an exceedable multiple. The question is this: Risk management and due diligence are vital market drivers, but they are data-insatiable; any and all data that casts a light on risk must be included in the process; it is the analysis, especially predictive analytics, which adds the value; so who will own the analytics – the data companies, the market intermediaries (Thomson Reuters, Bloomberg etc), or the end user customers?

Those of us who come from the content-driven world – they were out in force at Briefing Media’s splendid Digital Media Strategies event last week in London – find this understandably hard to argue, but our biggest single threat is commoditization. Even more than technology disruption, to which it is closely related, data commoditization expresses the antithesis of those things upon which the content world’s values were built. When I first began developing information services, in pre-internet dial-up Britain, we spoke lovingly of “proprietary data”, and value was expressed in intellectual property that we owned and which no one else had. For five years I fought alongside colleagues to obtain an EU directive on the “Legal Protection of Databases”, so it is in a sense discouraging to see the ways things have gone. But it is now becoming very clear, to me at least, that the value does not lie in the accumulation of the data, it lies in the analytics derived from it, and even more in the application of those analytics within the workflow of a user company as a solution. Thus if I have the largest database of cowhide availability and quality on the planet I now face clear and present danger. However near comprehensive my data may be, and whatever price I can get now in the leather industry, I am going to be under attack in value terms from two directions: very small suppliers of marginal data on things like the effect of insect pests on animal hides, whose data is capable of rocking prices in markets that rely on my data as their base commodity; and the analytics players who buy my data under licence but who resell the meaning of my data to third parties, my former end users, at a price level that I can only dream about. And those data analytics players, be they Bloomberg (who in some ways kicked off this acquisition frenzy five years ago when they bought Michael Liebrich’s New Energy Finance company) or others, must look over their shoulders in fear of the day when the analytics solutions become an end user App.

So can the data holding company fight back? Yes, of course, the market is littered with examples. In some ways the entire game of indexation, whereby the data company creates an indicative index as a benchmark for pricing or other data movement (and as a brand statement) was an attempt to do just that. Some data companies have invested heavily in their own sophisticated analytics, though there are real difficulties here: moving from that type of indicative analytics to predictive analysis which is shaped as a solution to a specific trader’s needs has been very hard. Much easier was the game of supplying analysed data back to the markets from which it originated. Thus the data created by Platts or Argus Media and the indexation applied to it has wonderful value to Aramco when pricing or assessing competitive risk. But in the oil trading markets themselves, where the risk is missing something that someone else noted, analysts have to look at everything, and tune it to their own dealing positions. Solutions are changing all the time and rapid customization is the order of the day.

Back out on the blasted heath which once was B2B magazine publishing, I kept meeting publishers at DMS who said “Well, we are data publishers now”. I wonder if they really understand quite what has happened. Most of their “data” can be collected in half an hour on the Open Web. There is more data in their domains free on DBpedia or Open Data sources than they have collected in a lifetime of magazine production. And even if they come up with a “must have” file that everyone needs, that market is now closing into a licensing opportunity, with prices effectively controlled, for the moment, by those people who control the analytics engines and the solution vending. Which brings me back to Verisk and the huge mystery of that extravagant pricing. Verisk obviously felt that its analytics would be improved in market appearance by the highly respectable Wood Mackenzie brand. Yet if a data corner shop, let alone Platts or Argus Media, were to produce reporting and data that contradicted Wood Mackenzie, anyone doing due diligence on their due diligence would surely demand that Verisk acquire the dissenting data and add that to the mix? If data really is a commodity business, far better to be a user than an owner.


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  1. David Worlock on March 20, 2015 09:37

    The perfect illustration of this thesis came from Elsevier a week later:

    PR Newswire: news distribution, targeting and monitoring
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    AMI Software and Elsevier Announce Agreement for Integration of Scopus Data into AMI Enterprise Intelligence

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    PARIS, March 19, 2015 /PRNewswire/ —
    AMI Software (AMI), a leading provider of market intelligence solutions, and Elsevier, world-leading provider of scientific, technical and medical information products and services, announce the agreement to provide AMI Software’s core product AMI Enterprise Intelligence (AMI EI) with access to data from Scopus, the largest abstract and citation database of peer-reviewed literature, with smart tools that track, analyze and visualize research.
    The AMI-Elsevier agreement allows AMI customers, with a subscription to Scopus, to import bibliographic records from Scopus, via an automated process, into AMI EI. This allows them to significantly improve the quality and the relevance of their online monitoring and data collecting projects, expanding on their capabilities of online information analyses and distribution.
    “The creation of a dedicated Scopus connector by AMI Software will help us gain precious time in collecting scientific data. Combined with other information sources, this solution allows us to enrich our bibliographic collections from which we can derive our data and scientific literature analyses,” explains Odile Solich, responsible for monitoring activities at the Institut Pasteur de Lille.
    Scopus contains more than 56 million records and 21,900 titles from 5,000 international publishers covering scholarly content in all disciplines: science, technology, medical, social sciences and arts and humanities. This added data will significantly strengthen AMI Software and will be directly available, by API, as new data source within the AMI EI platform.
    “We are delighted to have signed this agreement with Elsevier,” said Alain Beauvieux, CEO of AMI Software. “The agreement demonstrates Elsevier’s confidence in AMI and represents a significant evolution in the breadth and value of Knowledge Management and Market Intelligence solutions AMI is able if offer its clients.”
    “With the wide range of scholarly content that Scopus covers, as well as its additional functionality, we are able to provide valuable insights into research production and impact,” said Cameron Ross, Vice President of Product Management, Abstract & Indexing Databases at Elsevier. “We hope to meet the needs of AMI customers so that they can more accurately assess research information available online.”
    About AMI Software
    AMI Software (AMI) designs and develops competitive and market intelligence software to capitalize on the value of online information. Our software enables internet monitoring, internet intelligence development, evidence-based horizon scanning and identification of early warning signals and assessment of security, threat and risk. Deployed in multiple countries, languages and industries our innovative products are used in the most demanding of information processing environments.
    AMI provides both the technology and operational expertise necessary to ensure absolute success in delivery of our clients’ business intelligence projects. With over 150 clients, AMI contributes to the success of many international organizations. The company has offices in the UK, France and Morocco with partner offices in the United Arab Emirates and Tunisia.
    About Scopus
    Scopus is the largest abstract and citation database of peer-reviewed literature and features tools to track, analyze and visualize scholarly research. Its comprehensive database contains 55+ million items indexed from 21,000 titles from more than 5,000 publishers worldwide, ensuring broad interdisciplinary coverage in the fields of science, technology, medicine, social sciences and arts and humanities. Scopus was designed and developed with input from researchers and librarians and features direct links to subscribed full-text articles, other library resources and interoperability with applications such as reference management software. Scopus is part of the Elsevier Research Intelligence portfolio which includes the SciVal tools, the Pure system, rich data assets and custom Analytical Services.
    About Elsevier
    Elsevier is a world-leading provider of information solutions that enhance the performance of science, health, and technology professionals, empowering them to make better decisions, deliver better care, and sometimes make groundbreaking discoveries that advance the boundaries of knowledge and human progress. Elsevier provides web-based, digital solutions – among them ScienceDirect, Scopus, Elsevier Research Intelligence and ClinicalKey – and publishes over 2,500 journals, including The Lancet and Cell, and more than 33,000 book titles, including a number of iconic reference works. Elsevier is part of RELX Group plc, a world-leading provider of information solutions for professional customers across industries.
    Media contact
    Claire Guillou
    Director of Marketing AMI
    + 33-14-297-9337
    cgu@amisw.com

    Harald Boersma
    Director Corporate Relations, Elsevier
    +31-20-485-27-36
    h.boermsa@elsevier.com

    SOURCE Elsevier

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