It’s well known that open public data – particularly municipal data – has the potential to impact civic engagement and how public services are delivered. But the open data concept also generates significant economic value in the private sector as well, according to a report by McKinsey & Co.
Using data effectively could generate from $3 trillion to as much as $5 trillion in additional value each year – $1.3 trillion would benefit the United States, the report notes.
Although it’s early days as far as the open data trend is concerned, McKinsey says applying analytics to both open and proprietary knowledge has the potential to unlock significant economic value.
“Open data can become an instrument for breaking down information gaps across industries, allowing companies to share benchmarks and spread best practices that raise productivity,” according to the report.
Used in tandem along with proprietary data, public data sources can speed innovation and help businesses replace traditional decision-making methods with data-driven approaches. But that means putting the technologies and talent in place to collect and analyze the data, the report notes.
Open data analytics can also help companies uncover what their consumers want, allowing them to improve new products and discover what doesn’t work. That can lead to leaner, more reliable processes, according to the McKinsey report.
According to McKinsey, open data could benefit consumers and companies in the following industries:
Consumer Products: “We estimate that $520 billion to nearly $1.5 trillion in value per year could be enabled through the use of open data in consumer products,” the report notes.
Open data can help manufacturers and retailers generate sales and improve customer loyalty, by more finely segmenting consumer types and customizing store layouts and product varieties for specific neighborhoods.
Oil and Gas: “Across the oil and gas value chain, open data could help enable $240 billion to $510 billion a year in value, by improving investment decisions about where to explore for new reserves and build downstream facilities,” according to McKinsey.
Additionally, sharing data on how they consumer energy can help consumers make more informed decisions about their energy consumption (for example, reducing their use of natural gas).
Consumer Finance: In banking, insurance, and real estate, McKinsey estimates $210 billion or more can be generated by using open data to improve product design and underwriting. In particular, organizations in these industries can use open data to assess risks for consumers without credit histories, opening up potential new sources of business.
