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Data Gold Rush Briefing
Below are the write-ups from our three recent Data Gold Rush events inSan Francisco, Silicon Valley and London.
Key thoughts from San Francisco Dinner 9 October
"There's a generational divide in relation to use of personal data. Younger people understand the trade-off of value for data, while older people do not."
That's how one of the attendees at our San Francisco Dinner debate about Big Data summed up one of the major data challenges for US businesses.
Another major challenge is the EU regulatory environment – the basis of OC's survey – which is very different to that in the US, where there is almost a complete lack of regulation. Germany was highlighted as the European jurisdiction where people and laws are most protective of personal information. However, even in Germany, there is a strong generational difference with younger people much more open to sharing personal details than older groups.
The biggest challenge, however, is one of transparency. A comparison was made with everyday credit score reporting, which collates confidential financial data with very little transparency. Consumers do not object to this practice as they are simply not informed, since they are unaware of the credit agency data collection when they assent to it. However, online, companies transparently ask for this information, which results in lower levels of data collection.
Attendees also highlighted the time it takes to get the basics in place for Big Data. Data cuts horizontally across many industries and certain sectors are moving quickly while others will take years to collect, manage and use data sets. For example, the UK Telecoms industry, which is in the early stages of trying to own its network and user data will take many years to figure out how to deploy and monetize these vast amounts of data.
Questions over the European regulators' approaches were also raised. In particular with relation to cookie legislation, which was seen as a kneejerk reaction to a limited consumer outcry. Along with other privacy legislation in Europe, some attendees saw this as an ineffective policy that will negatively impact businesses.
Others said that they could understand the regulators' invidious position, with one attendee pointing out that:"With the regulator and consumer challenge no one has a perfect solution. Very few people in business or government truly understand either the situation or the practical outcomes different courses may produce. Transparency is the key. As a company dealing with the shifting regulatory tide it is very hard to trust that the regulator will do the right thing."
Key thoughts from Silicon Valley Dinner 10 October
US companies doing business in Europe need to understand that European data rules are completely different to those in the US. Those that fail to take those differences into account run the risk of huge fines and negative publicity.
That was the verdict of a group of business leaders who joined UK law firm Osborne Clarke for a Big Data debate in San Francisco.
Steve Wilson, who heads Osborne Clarke's Palo Alto office, says:
"US regulation is very light- touch and it can come as a shock to find just how different the European approach is.
"Our research, which was carried out in 4 different European countries, found that the data rules in Europe are largely a product of the concerns that a lot of people there have around sharing their personal data.
"We found that Germans are particularly cautious, but in all the countries we looked at there was a clear generational divide, with younger people much more willing to share their data.
"The clear message is that with Big Data creating more and more global opportunities, regional data rules are going to have to be an increasingly important consideration for companies."
Osborne Clarke's findings are summarised in an infographic, which is available to download online here. They are also inviting people to join their #datagold debate on Twitter.
London event - 2 October 2012
In London, the event saw our expert panel attempt to pinpoint exactly what lies beyond Big Data, while the audience of 100 industry insiders debated the issues and opportunities.
What is Big Data? Osborne Clarke's Mark Webber neatly summed it up at the firm's Data Gold Rush debate, as a tool, a hope and a paranoia. That provided the starting point for a wide-ranging discussion, which attempted to pinpoint exactly what lies beyond Big Data, what new technologies are on the horizon and, perhaps more importantly, what the opportunities and threats are.
How free is free?
Before the debate started, Osborne Clarke's Nick Johnson provided some context by presenting the results of the firm's Ipsos Mori European Data Survey. The research clearly showed that businesses need to do more to make the consumer/supplier contract – that 'free' services are 'bought' with data - more transparent. While individuals are becoming more willing to share data, a lack of understanding of the benefits of doing so could prevent data being truly big.
It all goes back to marketing basics, according to Johnson – make the benefits clear and use language that engages the consumer. That's not a universal panacea, but it is something that's largely missing from current data activity.
The Big Data takeaway
One panellist identified portability as a central feature of data. And it is precisely that which makes it a hope and also a paranoia, both for individuals and businesses. Individuals are concerned about a perceived lack of control over their data (witness OC's research, which showed that, across Europe, only around 40 per cent of individuals felt comfortable sharing data), while businesses worry about that consumer perception driving greater and more onerous regulation. But does it need to be a self-fulfilling prophecy?
Ben Keylock from Dunnhumby pointed out that although businesses now have technologies that make them better able to manage data than ever before, many still have a tendency to get 'over excited' about new data before they actually understand the data they already hold. Self-control, in terms of managing existing customer data, is central to building the trust needed to encourage greater data sharing by individuals.
OC's Sue Gold added that users need to have a better understanding of new technologies and use of data in order to achieve required standards of transparency and consent. In part that can be achieved through better education. James Leaton Gray echoed that, pointing to the need for businesses to be on the front foot about the fact that consumers already get payback - free content, for example – in return for their data. Better education and market forces mean that the compensation consumers expect for their data may rise in coming years.
Transparency was a theme that the panel raised again and again and not just between businesses and consumers. The transparency of data within companies is vital in terms of creating the right environment for Big Data to flourish. Mike Chalfen from Advent Venture Partners pointed out that the advertising networks gaining market share are those that have well-crafted management information systems and can see, dollar by dollar, every time money is being spent.
Recognising where data holds value and understanding how to release it are vital for all businesses, no matter how traditional or high-tech they are. Clearly, companies that are able to use and manage data smartly are the ones that will create the most value, be most trusted and, crucially, attract investment.
However, transparency was also seen as a double edged sword by Stephan Pretorius from Acceleration, who thought that transparency plus portability makes it clearer than ever that the consumer is the product. That realisation is likely to make life more difficult for digital advertisers as they try to manage demands for greater value from individuals.
Some audience members saw this as an opportunity, however, saying that there is a big gap in the market waiting to be filled by companies that recognise that people want value in exchange for data. And in attempting to fill that gap, the smart movers will create something that goes way beyond simple data mining.
So, what of the future? The panel agreed that, while the Data Gold Rush isn’t like the Wild West, many players are suffering from a lack of vision and oversight because of the pace of change – and that creates danger. Businesses need to understand the sheer scale of the opportunity and then apply all the usual rules of good business – transparency, analysis and even good sales practices – in pursuing it. It's not rocket science, or even data science, but the way companies act now will influence public buy-in, regulation and, ultimately, their own ability to release value from data for years to come.