We’ve all heard the positive cries of business owners who are fully embracing the new data economy. But many enterprises still haven’t dipped their toes into the knowledge pool for one reason alone: a lack of understanding. So how does data exchange work exactly?
The basics of how data exchange works
The most simplistic answer to the question ‘how does data exchange work’ isn’t comprehensive, but it does give you a general guide for what to expect. Essentially, data exchange is the process of sharing data with either another company or on a data exchange platform.
A more in-depth explanation is that it is a deliberate sharing of data between various parties for the benefit of all stakeholders. This exchange allows Chief Data Officers (CDOs), for example, to access certain data points around the world that can assist with their data analysis or data-driven marketing tactics – all for the betterment of their own organization.
When there is access to multiple data points, such as with a data exchange platform, the benefit for all stakeholders grows exponentially. This is what we are seeing more and more as companies across all industries look to invest in the new data economy.
Things to consider before performing a data exchange:
- Data governance strategy
- Legal agreement between participating organizations.
- Customer consent for data sharing.
- License terms.
- Technical solution for performing the exchange.
- User access and permissions.
- Agreed output terms.
Data exchange technologies
The difference between a basic data exchange between two (or more) businesses and a ready-made data sharing platform is that the former can be time-consuming and lacking in value for all parties. Setting up one-off agreements and bespoke technical solutions does not allow for data collaboration to scale.
Whereas with the latter, the very best data exchange platforms are able to consolidate a variety of isolated and scattered data for the benefit of all participants. Accessing 2nd party data for external organizations can offer new insights into data you already have access to.
This data exchange company (and others) are doing it right
Sure, there will always be the outliers who breach their data sharing privileges in a negative way, such as Facebook’s data sharing practices, or how Netflix and Spotify both had access to – and used – private data. However, the vast majority of organizations utilizing the data economy are doing so for the greater good, including for social causes.
Research and advisory firm Gartner has shown how data sharing can help companies “improve society, gain talent and increase transparency.” Community Technology Alliance, for example, uses data-driven solutions to help standardize homelessness populations across various sectors and nations, helping to coordinate care for the homeless through relevant support organizations.
Uber and Lyft are both using data exchange to better understand their users’ needs and therefore personalize the customer experience (CX).
Even corporations that have been around for decades, such as Panasonic, are appearing on the latest lists of the top data sharing companies, which goes to show that the most innovative organizations are not always startups – but they are always forward-thinking.