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Open Data is becoming of age nowadays. The idea of opening up closed, proprietary data, for public consumption would have been heretical a decade ago. But, advances in Web technology (we are currently riding the maturity curve of 2.0, going toward a 3.0 or semantic web), proliferation of social media, and a general appetite for openness from the general public, make Open Data popular. One of the fundamental principles of opening up data is that data custodians (those who hold and maintain the data) could benefit from exposure to the community. And when these custodians are Governments, then the issue of openness becomes political as it leads to accountability, responsibility and open democracy. This fundamental principle drives most high profile Governmental ventures for open data; for example, in the UK, HM Government embarked onto a venture to open up Government held data to the public, through a single access point, the UK citizen can now browse and use a divulge of data from all sorts of Government departments. As Nigel Shadbolt, a pioneer of this initiative recently pointed out:

“Open data provides a platform on which innovation and value generation can flourish. If governments publish their data and get out of the way, the applications that people want will emerge. In the UK, services like FixMyStreet reduce the pain of reporting local problems like dog fouling and broken streetlights by allowing the public to share their complaints online. Who’s Lobbying helps keep track of the special interests influencing government ministers. Schooloscope makes school performance information useable. SpotlightOnSpend shows not just how various councils are spending our money, but which companies are profiting. And there are dozens of apps like TravelOptions that make finding your way around London easier.All are powered by open data”. 

Similar efforts in the US, led to data.gov, White House’s effort to provide access to US Government data. Again, as with the UK site, Apps are the main driver to ease use of open data by members of the public.

Looking at the economics of opening up data, McKinsey reports that in the developed economies of Europe, Government administrators could save more than €100 billion in operational efficiency improvements alone by using open data, not including using Open Data to reduce fraud and errors and boost the collection of tax revenues.  Open Data also hold the promise of community building and social engagement, an emerging trend for doing businessnowadays. Indeed, most of the Apps in UK’s and US’s Government portals are developed by enthusiasts and practitioners, not the usual multinational corporations of the software world. What drives people developing Open Data Apps differs from region to region and depends on their personal circumstances, but it appears that most embark onto this venture to do good and feel good: for example, US based Open Action digital cartography specialist aims to provide web based visualisations for content people care about; in Canada people’s Apps helped fight corruption and saved the Canadian Government $3.2BN.

Open Data as a value creation medium, however, is yet to be proved in the business world. Most of its use is through Governmental programmes. And most data exposed through these programmes are concerned with how Governments spend tax payers’ money. So, there is an inherent accountability relationship where people paying taxes for services and Governments opening up their spending books to demonstrate how well they’ve spend our taxes. But, the situation is slightly different in the corporate world. Most data held there, are highly personal and proprietary. Almost note of the data sets available through Government sponsored portals contain personal information. But, your iPod or iPhone data that Apple could hold are sensitive and personal and you wouldn’t want to share them with the world. Even if these data were to be shared, you would want to have trace mechanisms in place and visibility of how and where your data are used. Lessons learnt from the hot IT area of Cloud computing, tells us how difficult is to police and monitor this. Another intriguing issue that businesses have to overcome is how to make money out of something which is, fundamentally, free. Open Data are free. There is no fee to pay when accessing terabytes of data at the Government sponsored portals. Yet, the Apps and data collections of these data could yield billions in revenue, if used in the right context.  There is a lack of business models for monetizing Open Data use. Neighbouring domains, like web-based search, tells us that advertising could be a natural way of making money: it’s free to search with Google, but still Google’s ingenuity with selling ads brings in more than $30BN per quarter! Impressive return from offering something that is essentially free to use. Others suggest that specialised Apps or services, subscriptions to APIs that process raw Open Data and offer additional features (like filtering) and premium data sales, could be alternative business models.

Nevertheless, the jury is still out on the value of Open Data for businesses. It is clear that by now, most Governments are willing to, and will open up public data to the masses. They already get their ROI, as examples above illustrate and also get an engaged electorate – which is a boon for any Government these days. Despite tight Government budgeting whichthreatens hosting portals, Open Data as a movement will continue to flourish, at least for public sector data. But, businesses hold, arguably, a lot more data – collectively – than any Government. The quest is how can these data open up without sacrificing a company’s competitive edge, proprietary knowledge and contribute their bottom line: generate revenue.

Dr Yannis Kalfoglou