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.
Feb
4
Barely a Whimper
Filed Under B2B, Big Data, Blog, data analytics, Financial services, healthcare, Industry Analysis, internet, Search, semantic web, Uncategorized, Workflow | 1 Comment
British public policy on data availability for commercial re-use died a sad, whimpering, undignified death yesterday. No one noticed. Years of political neglect, and masterful inactivity by the civil service, meant that it had long since ceased to be a public topic. The idea, borne in the Community in Brussels, enshrined in European Directives, cleverly headed by the Brits in terms of passing secondary legislation and apparently wanting to be best in class at data sharing (how often do we see that the way to best inhibit change is to assume its leadership!) probably fell mortally ill some years ago, when the current UK coalition government assumed office, but we only really woke up to the reality yesterday, when the government abolished APPSI – the Advisory Panel on Public Sector Information – to mark the fact (http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2015-02-03/HCWS245/). The idea once engendered that the swiftest way to move our society into the inevitability of the networked world was for government to share data with the private sector, to stimulate national information industries by so doing, and to reap a result in wealth creation, employment and a widening tax base is accepted from the US to China. (Think only of the Peoples Bank working with Alibaba et al to keep non-Chinese credit rating at bay.) It is widely accepted in Europe, and many countries have now moved past the UK in this area. Sadly, poor old Britain caught between blind politicians of all shades and civil servants who saw information as power – to be retained at all costs – has lost out on all fronts.
The bitterness here is personal. As a campaigner and lobbyist I fought the good fight for a decade to get the European legislation through, and when it passed I thought, as I took a seat as a founder member of APPSI, that the battle was largely done. How foolish was that! The high ground of British public information was then – and still is – in the hands of state – owned monopolies whose hugely restrictive licences and high fees have proved a barrier to letting a hundred information flowers bloom, let alone a thousand. The UK has the energy – go and look at the thousands of digital start-ups in Shoreditch if you doubt it – and it has the financial investment muscle. But the catalytic element – being able to mash cheaply available, easily licensed data with third party and proprietary content – is wholly missing. And why is that? Because we have Ordnance Survey, HM Land Registry and countless other public monopolies who have the protection of the Treasury and of departments of state still seeking to flesh out a power base and avoid financing the collection and re-use of public information – that is, information collected at the taxpayer’s expense to perform a public duty enshrined in statute – in a proper networked world manner. When the history is written it will be found that Ordnance Survey on its own has been one of the greatest barriers to change in this sector. And if you think this overstates the issue, reflect that this country, which is about to license fracking for shale gas amidst fears of subsidence, still does not universally license the data which would show you whether your home was in danger of subsidence from historical coal mining. For that, you must go to an office in the North of England, pay a ludicrous fee, sit in a search room armed only with paper and pencil and have a search done. And this useless monopoly is a fiefdom of BIS, Britain’s department for Business!
But do not, whatever you do, blame BIS. They are highly attuned to the importance of public data. So highly attuned that when they privatized the British Post Office in this government, they sold it with the databases containing the post (Zip) codes within it. Sold this data, unpriced, not as a separate entity but lumped in with the postboxes and the delivery vans. Turned a public monopoly into – a private one. No special conditions attached to licencing. And then said afterwards that they did not realise what they had done! With people like this in charge of public policy, an Advisory Panel was certainly redundant. Quite superfluous. Almost embarrassing. Just think what such a panel make of the privatization of HM Land Registry. This was halfway down the slipway last year when the politicians lost their bottle, so it was withdrawn at the last moment. Given the way these public guardians treat public data, it would have made little difference if that became a private entity as well, but at least in that instance there was a chance of defining access conditions and securing standard licensing terms in the course of its change of status. As it is, the Shareholder Executive (designed to protect the public equity in these agencies – why does government always work in complete opposite directions to the intention) and the old villain, HM Treasury, work brilliantly together to fend off the public interest and preserve what once was in the face of what might be.
By now you think you are listening to a lunatic on a cold night shouting at the moon. So let me end with the sensible voice of the leading and authoritative academic commentator in this field, Bob Barr: “In the UK we have ended up with a lazy, counter-productive, business model based on holding public data hostage wherever possible, maximising the short term return from users that can derive the highest value, and pay the highest price, and diligently preventing the maximization of use in order to protect the monopoly rents that the high value users will pay.
However cogent, or otherwise the arguments from APPSI, ODUG and many lobbying and pressure groups before us, and no doubt after us, have been, the hidden hands of the Treasury, and its wicked offspring in ShEx (the Shareholder Executive), have prevailed in private. Their arguments are never publicly articulated. They do not publicly assess the costs and benefits of their approach across the economy as a whole but they have the ear of ministers in governments of all colours, no doubt egged on by the custodians of the data. This advice appears to count for much more than any academic, expert advisory or consultancy arguments articulated in public.”
Now government, which never implemented the data policy and has no policy of its own except no change, has shut down the source of advice. Not just a sad day for this debate, but a sad one for entrepreneurial Britain.
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