Alternative data is changing how economic analysis works, especially in the financial sector, but what is the meaning of alternative data business for data holders (e.g., POS data holders, companies with satellite images)?
We expect that many companies would create an alternative data business as a first step in the data business
It has long been pointed out that the amount of data will increase dramatically with the spread of cloud computing and the advent of the IoT era (*1). Many companies are now seeking an opportunity to use the big data they have collected in their business.
The reality is that, however, most companies are in a situation where they have collected data but cannot create any business out of it.
In order to launch a data business, processes such as those illustrated below must be completed, which are a barrier for data holders to enter the data business world.
Each of these processes requires deep expertise and costs. In addition, just because you follow these processes, it dosen't necessarily mean you can make a profit out of it, which is why it is very difficult for those in charge to start a business.
In this regard, an alternative data business is one in which the target customers are data analysts of institutional investors and manufacturing companies. The customers are accustomed to handling data in the first place, and they don't require much consulting and service development such as UI/UX development. Therefore, the cost of "organizational development" and "business development" in the processes above can be greatly reduced compared to other data businesses such as the marketing and advertising domains.
In addition, the distribution of information that can be used for economic analysis is a business rooted in social issues, it is easy for people in charge of the data business to gain the support and understanding of individuals and society when utilizing their data, which is an advantage and has recently been regarded very important (*2).
That's why alternative data businesses are increasingly being positioned as the first step in the data business
*1... For example, WHITE PAPER about Information and Communications from MIC predicted in 2014 that "the amount of international digital data is increasing dramatically, and is expected to reach about 40 zettabytes by 2020 from about 1.8 zettabytes (1.8 trillion gigabytes) in 2011."
*2... For example, Shinichi Yamaguchi et al., "The Future of the Data Economy: Japan's Competitive Strategy and Personal Information Protection (Special Issue on Chijou #123)" (April 2020) states that "One thing JCB Consumption Now and Mobile Spatial Statistics have in common is that, from the consumer's point of view, we would like to avoid transfer of information if possible from the perspective of sensitivity. On the other hand, there is a need for comparative analysis with more data on the part of the operator. Although the two had previously been in conflict, this is an example of successful commercialization through the coordination of technological development and institutional response."