Published on the 02/02/2016 | Written by Beverley Head
Data is a form of capital on par with financial capital, even though it can’t yet be shown on a balance sheet, according to Paul Sonderegger, big data strategist for Oracle…
Sonderegger, who is currently visiting Australia, said that data fulfills all the economic definitions of capital and can be a source of competitive advantage. He offered the example of US healthcare company Cerner which has developed an algorithm which, when fed patient data, can detect symptoms of sepsis even before it is evident in the patient.
“This is the way that data can be a source of sustained competitive advantage,” he said, since one organisation could have access to digital capital that its competitors might not.
Gartner research released this week shows that investment in advanced analytics is likely to rise 14 percent this year to $1.5 billion. It also predicted that by 2018 more than half of the world’s largest organisations will compete using advanced analytics and proprietary algorithms “causing the disruption of entire industries.”
In Australian Sonderegger said that retailer Coles was experimenting with the technology that allowed consumers to automatically construct a shopping list. The Hiku system allows people to say aloud what they need to buy, and a smartphone app ensures that goes onto an online shopping list.
“There is a growing recognition that data is not just a record but the raw material for new products and services,” he said.
He added that Coles no longer just knew what people needed to buy, but was developing insights around how shopping lists were constructed. “They are capturing data that their rivals may not have.”
That of course confers market powers, and the regulators are already starting to take interest in how access to data is impacting market powers. The ACCC has already signalled it is looking for a change in the law surrounding market power, that might allow it to exercise more control over how data is being used by market leaders.
Sonderegger said that the regulatory challenges were significant for both sides as “It is not always clear when a company has a monopolistic hold on data or when it is abusing that to hamper competition.” It may not be clear, but the fact that it is possible is what is exercising the regulators.
And Sonderegger acknowledged that the rise of data capital will challenge the relationship between companies, regulators and governments.
