Monetize or bust: Are tech leaders up for the challenge?
More than half of companies surveyed in Deloitte’s Global Technology Leadership Study say they’ll be generating revenue through data or tech in the next 18 months. But are they ready for it?
Editor’s Note: This is a guest post from a Deloitte Consulting colleague, sharing their own field notes from the future on the NExT team’s Substack. This week, we dive into the business of technology: the leaders and leadership needed to put the technology of our Now, New, and Next to work. Onward, together.
Technology is no longer a support function—but if you’re reading this, you already know that. Technology is a value driver, both qualitatively and quantitatively, with the potential for transforming organizations in many ways.
Just consider that more than a third (36%) of executives surveyed in our 2023 Global Technology Leadership Study say they’re currently generating revenue from selling data, technology, or tech-enabled services. Another 16% expect to in the next 18 months.
One example of data monetization would be a car company that collects real-time data from its electric vehicles and combines that data with information from a highway authority to create a robust view of road and mobility conditions. These millions of data points can then be shared as a subscription service to other automakers, who in turn can use these insights to enhance vehicle safety and alleviate congestion on the road.
But are we ready for this shift in business models?
To let you in on the hard truth: Many organizations are significantly behind when it comes to data maturity and having the operating model, talent, and mindset to successfully monetize their data or tech. Unless organizations start making transformational changes today, they could be outrun by their competition.
Tech leaders need to drive this change within their organizations—and the opportunity is there for the taking. By 2020, the global market for data monetization reached US $2.1 billion. By the end of this decade, the market is anticipated to surge to US $15.5 billion—a compound annual growth rate of 22.1%.
Many hammers, few nails
Currently, tech leaders’ operational responsibilities (e.g., infrastructure management, delivery, business continuity) are keeping them from being strategic about monetization. Data management and analytics doesn’t even rank in the top five areas of where tech leaders currently spend the majority of their time, effort, and energy. On top of that, our research also shows no clear consensus around who should own and lead data efforts. As a result, even though around 60% of surveyed leaders are investing in areas like advanced analytics, data modernization, and data management, much fewer are actively investing in monetization to turn IT into a profit center.
Establishing strong data management and governance practices is an important first step for monetization. But while you are doing that, you can continue to connect with your business peers and look for opportunities to put data to use. Instead of being solely focused on building the best hammer (shoring up data and infrastructure), the trick is to find the right nail (customer need). This transformation is not without its challenges, but the good news is many organizations, both tech and non-tech, already have data assets that can be monetized. Just consider all the potential sources outlined in the graphic below.
Data is the new gold (IT’s version)
There are four approaches you can take to monetize your data:
Sell data sets
Sell insights
Embed data and insights into existing offerings
Sell to and through ecosystem partners
How are tech leaders putting these approaches into action already?
One CIO at a large distribution company invested heavily in building out a warehousing software (diverting funds from an ERP upgrade) that offered real time data and the ability to create significant reduction in their inventories. This gave them not only a competitive advantage in their industry, but also the ability to sell this capability to their competitors.
Meanwhile, one of the nation’s largest car finance companies moved a step further by coining a new mindset within IT: think of your organization as the first customer, not the only customer. After leveraging their tech to drive efficiencies internally, they white-labelled their software to other businesses to generate revenue. It’s a perfect example of leveraging tech to drive both internal and external value.
Looking forward
Data and tech monetization in the future, coupled with AI and automated decision systems, could fundamentally change operating models for many companies. For example, operational technology data in an industrial manufacturer could be continuously monitored with AI algorithms to determine the remaining lifespan of an industrial part. In turn, this could lead to an automatic order and shipment of an aging part in need of replacement.
Similarly, AI monitoring of patient data from healthcare equipment could adjust dosage, create alerts, or predict disease progression to significantly improve patient outcomes. This would require trusting the technologies and algorithms, putting reasonable regulations in place, and ensuring the safety and privacy of data.
Tech leaders will need to envision these scenarios in their enterprises and start to develop the skills, operating models, and maturity of data and tools to be able to deliver on this future. After all, technology is no longer a support function, and leaders need to fundamentally re-design, or even re-brand, the technology team accordingly.
- Khalid Kark, Global CIO Research Director, Deloitte LLP
Special thanks to Erika Maguire and Megan Turchi for their contributions to this post!