Businesses of the 21st century are undergoing a fundamental shift in how they think about data. What was once viewed as a costly resource to help an organization make a strategic decision is slowly being appreciated for what it is: an asset with inherent value.
To see this in action, we need look no further than Microsoft’s purchase of LinkedIn, which was acquired for US$26 billion earlier this year. Why LinkedIn? As ZDNet notes, it’s all about access to the right data. By connecting the world’s leading provider of business and office applications with the world’s leading professional network, Microsoft has been quite explicit about its intention to capitalize on the complementary partnership – matching its products with relevant LinkedIn users. In short, Microsoft didn’t spend US$26 billion on LinkedIn’s physical assets, human capital and intellectual property; it spent money on the professional network’s rich data.
Data as a business driver
The Microsoft-LinkedIn sale isn’t an isolated incident. As Steve Todd notes, data has become a driver in mergers and acquisitions, as demonstrated by LinkedIn’s purchase of Lynda.com. It’s also playing a key role in asset valuation, as seen in the Caesars Palace bankruptcy proceedings. In both cases, the possession of data was determined to play a huge role in the company’s overall value. Data is also increasingly becoming a source of direct monetization for companies. Take the US$60 million deal between genetics/ancestry firm 23andMe and pharma giant Genentech, for example. As Forbes notes, the deal not only allows 23andMe to profit directly from the genetic data it holds on users, which has been donated by customers, but also provides the opportunity to develop a long-term, sustainable business model thanks to a cash injection. In fact, this single deal with Genentech will allow the company to earn almost as much as it would if it doubled its customer base, and company officials say more deals of this nature are on the way.
Insuring valuable data
If anything demonstrates a shift in thinking, it’s the emerging data insurance market. Arising from companies’ need to protect their data from cyberattacks and other threats, cyber insurance policies jumped 20% last year alone, with one in three companies now protecting themselves against digital malevolence. Ultimately, as businesses mature, data will be thought of less as a cost center and more as a potential liquid asset. It’s becoming necessary for any savvy business person to consider the commercial opportunity of the data they possess, and just how valuable it might be to the right person or organization.