Open data can also be used as an element of crowd sourcing, making it available for people ready to provide a solution to a challenge. This pulls in a wider range of skills than a company is likely to possess in-house.
The ODI provides guidance on how to make a business case for open data (http://theodi.org/guides/how-make-business-case-open-data), the first steps of which are to think about the organisation’s goals, then look at how the data is used, how it could be used and what other data could be released to good purpose.
The key measure, creating value for the business, tends to fit within one of three models, or possibly a combination. First is the ‘freemium’, often used for web applications, in which a free source of data is subsidised by a paid-for service that provides extra value for the user.
Second is the cross-subsidy model, which funds the release of open data through other benefits to the organisation such as improving the information flow with partners, increasing brand awareness and making it easier for customers to use products and services.
Third is the reliance on network effects, which the ODI says has the most potential for big returns on investment. It can involve organisations collaborating to maintain open datasets, which can improve their quality and has scope to attract sponsorship or donations, and the release of data can help to grow the market for relevant products and services.
The institute says these should be compared with each other for a particular case, and with the impact of selling the data or doing nothing. It comes down to whether they can see a clear business benefit, and Stuart Coleman, commerical director of the Open Data Institute acknowledges that CIOs and business leaders are not going to invest in the area “unless they can see an opportunity to attack the bottom line”. He also says that identifying a return on investment is not straightforward.
“It depends on the use case. I don’t think you can make a blanket statement. It depends on the different business models.
“If you look at a cross-subsidy model, the insight you can get from a crowd of people who have access to data or information on your services is huge. We often engage in conversations that go along the lines of outsourcing research and development.
“By opening up data about your business you can potentially innovate faster and at lower cost than if you had to hire a bunch of internal equivalents, and you can do it with the inspiration of your customers. How you quantify that would depend on the nature of the business, but if you are a telco, for example, you could run an event and engage thousands of developers with your data. You couldn’t do that internally.”
He also acknowledges that it takes an effort to bring down the cultural barriers.
“I think business leaders don’t sometimes recognise how open data can be a huge opportunity, and we see it as our mission to inform, educate and collaborate with them. Traditional business information models are usually based on proprietary approaches, and the understanding piece is often a practical element. People don’t know about the right models under which to license their data.”
Some of the ODI’s work is directed at overcoming these barriers, including courses on the law around data licensing and how open data can be used by marketers.
It can claim some progress in spreading the word to the private sector, as its membership now includes 50 companies from several industries. But it is still early days, and the evangelists have to spread the word more widely to get organisations asking if there is an open data business case that will work for them.