Big Data, Big New Businesses

The health-care sector is a prime target for achieving new efficiencies. By sharing the treatment data of a large patient population, for example, care providers can better identify practices that could save $180 billion annually.

The Open Data Institute-backed start-up uses open data on doctors’ prescriptions to differentiate among expensive patent medicines and cheaper off-patent varieties; when applied to just one class of drug, that could save around $400 million in one year for the British National Health Service. Meanwhile, open data on acquired infections in British hospitals has led to the publication of hospital-performance tables, a major factor in the 85% drop in reported infections.

There are also opportunities to prevent lifestyle-related diseases and improve treatment by enabling patients to compare their own data with aggregated data on similar patients. This has been shown to motivate patients to improve their diet, exercise more often, and take their medicines regularly. Similarly, letting people compare their energy use with that of their peers could prompt them to save hundreds of billions of dollars in electricity costs each year, to say nothing of reducing carbon emissions.

Such benchmarking is even more valuable for businesses seeking to improve their operational efficiency. The oil and gas industry, for example, could save $450 billion annually by sharing anonymized and aggregated data on the management of upstream and downstream facilities.

Finally, the move toward open data serves a variety of socially desirable ends, ranging from the reuse of publicly funded research to support work on poverty, inclusion, or discrimination, to the disclosure by corporations such as Nike of their supply-chain data and environmental impact.

There are, of course, challenges arising from the proliferation and systematic use of open data. Companies fear for their intellectual property; ordinary citizens worry about how their private information might be used and abused. Last year, Telefónica, the world’s fifth-largest mobile-network provider, tried to allay such fears by launching a digital confidence program to reassure customers that innovations in transparency would be implemented responsibly and without compromising users’ personal information.

The sensitive handling of these issues will be essential if we are to reap the potential $3 trillion in value that usage of open data could deliver each year. Consumers, policymakers, and companies must work together, not just to agree on common standards of analysis, but also to set the ground rules for the protection of privacy and property.

Nigel Shadbolt is a founder of the Open Data Institute. Michael Chui is a partner at the McKinsey Global Institute, specializing in big data.

Copyright: Project Syndicate, 2014.