Think Twice Before Selling Data

If selling data isn’t your primary business, you should think twice before you enter the market. The main reason for caution is that it’s not an easy endeavor. It requires a long-term commitment and tremendous effort to sustain competitive advantage.

However, it’s not impossible. Owens & Minor (OM) is a good example of a company that successfully monetized its data as a secondary business. In 1997, the medical supply distributor began selling information about the products and services it distributed from hundreds of suppliers to several thousand hospitals. That information, now called spend analytics, was bought by suppliers to improve decision making around procurement performance.

OM’s information offerings grew over time from reporting and analytics to also include self-service portals and professional services, and then business process outsourcing. Due to this evolution, the company needed to create a distinct division to focus on the information-based part of the firm. That division required unique capabilities, including advanced data and technology management, to cleanse, standardize, and augment clients’ raw data. When necessary, OM acquired or partnered with other businesses to quickly build these capabilities.

Much of that development was driven by competition. Once the company entered the information-selling market, other distributors began to follow suit. Whenever it delivered a new information-based product or service, other distributors—not to mention group purchasing organizations, vendors, professional services firms, and pure-play analytics companies—were quick on their heels with competitive offerings.

More companies than ever before are now interested in pursuing data monetization. Prior to leaping into this area, learn from OM’s experience:

  • Ensure you have strong competencies in data management and/or data science, technology, pricing, legal, customer service, strategy, and innovation
  • If necessary, invest in new hires and external partnerships to attain those competencies
  • Consider how you will price your new information products within an emerging market
  • Create a dedicated organizational unit accountable for business model execution
  • Understand that achieving and sustaining competitive advantage will be incredibly difficult
  • Be prepared to continuously evolve your offerings to ensure they remain valuable and rare

Are you prepared to enter the data selling market?

Barbara Wixom is a principal research scientist at the MIT Center for Information Systems Research (CISR), and recipient of a Society for Information Management International Best Paper Award in 2000 for “WISDOM Provides Competitive Advantage at Owens & Minor: Competing in the New Economy.”