In the not too distant future ‘the data economy’ will simply be ‘the economy’. For the time being, it can be broadly defined as being made up of businesses and government agencies that trade in data or derivative data products (i.e. algorithms and applications), typically to boost innovation and the creation of new products and services.
Quantifying the value of the data economy is no simple matter. But it’s undoubtedly already enormous and growing exponentially. Amazon, Facebook and Google are data-economy businesses, as are the likes of REA Group, Xero, MYOB, carsales.com, Prospa and Afterpay. Economist Andrew Charlton has argued ‘digital innovation’ now accounts for 11 per cent of the GDP of advanced economies, generating around $6 trillion a year. Japanese PM Shinzo Abe recently observed economic growth is “fuelled no longer by gasoline but more and more by digital data”.
Data61 claims Australia can pocket $315 billion over the next decade if it gets it digital act together. Data61’s CEO has declared, “Every sector of the global economy has been redefined as a result of digital science and technology and the extensive use of data. The next digital wave to revolutionise existing industries and create entirely new ones is ours to capture. But the opportunity is perishable.”
Seizing the perishable opportunity
The US and China will likely remain the 800-pound gorillas of the data economy. But there are a handful of nations – Australia, Canada, Israel, Japan, Singapore, the UK – that could play an outsized role in disrupting existing industries and birthing new ones.
While it will face plenty of competition, Australia is well placed to become a data-economy leader. Australian governments have been quick off the mark creating a regulatory framework that strikes a healthy balance between encouraging innovation and safeguarding privacy. For example, Australia has had a Privacy Act in place since 1988. In contrast, Singapore didn’t introduce its Personal Data Protection Act until 2012. The EU didn’t roll out the GDPR until 2018. And the US still has no federal privacy laws at all.
The Federal Government is now bedding down the Consumer Data Right (CDR). This gives Australians control of their data but allows businesses, once they’ve gained consent, to access that data easily.
This regulatory environment, as well as Australians willingness to be early adopters, means there’s no shortage of ‘digitally mature’ major players in Australia’s banking, energy, retail, transport and telecommunications industries. Also, as a 2018 Data61 report observed, Australia is “globally competitive” in precision healthcare, digital agriculture, data-driven urban management, cyber-physical security, supply chain integrity, proactive government, legal informatics and smart exploration and production. As the report noted, Australia can become even more competitive if it makes the necessary investment in “technologies that collect, manage, analyse and use large amounts of data”.
That’s the good news.
The bad news is that Australia won’t get any second chances to gain a first-mover advantage.
Thriving in the global data wars
“Australia will either end up being a net exporter or net importer of data-economy IP,” Danny Gilligan, the co-founder of Data Republic, observes. “Either we will be buying other people’s blueprints, or they will be buying ours.”
Gilligan points to Qantas as an example of a venerable Australian company that’s worked out how to leverage data in an impressively 21st century manner. “Qantas is an incredibly sophisticated data company,” he says. “Its loyalty program, which has around 10 million members, adds hundreds of millions to the bottom line every year while delighting its customers. Qantas’s data-sharing arrangements with commercial partners mean, for example, Woolworths and Optus customers can earn Qantas frequent flyer points. Also, Qantas members can use their points to buy goods and services. With every transaction, Qantas builds a deeper, richer profile of its customers. Everybody wins – Qantas, its customers and its commercial partners.”
What Qantas did wasn’t rocket science. Many large, mid-sized and even small Australian businesses could readily commercialise their data.
“The hard bit is convincing key decision-makers that lots of new value can be created by accessing previously inaccessible data,” Gilligan says. “In contrast to their counterparts in, for instance, Singapore, Australia’s decision-makers aren’t as driven as they could be to create world-leading data economy businesses. In fact, it often falls to a chief data officer, or data-team manager, or someone on the marketing or insights team, to make a use case that captures the imagination of the powers-that-be.”
Once those powers-that-be have been talked around, Gilligan says it’s a straightforward process of:
- Building a data ecosystem and/or partnership strategy
- Unlocking value from data assets through data collaborations. (At this point, the organisation will need to invest in a secure platform)
- Partnering with startups to create and export data products
“Data Republic is happy to provide assistance at each stage of that process,” Gilligan says. “As the Qantas example illustrates, an incredible amount of value can be created both for individual businesses and national economies when data is made more liquid.”