Data plays many roles in the digital economy, from a resource fuelling tech giants and multinationals undergoing digital transformation to the produce reaped and grown by tech startups. In the wake of COVID19, it is now playing a greater role in facilitating more secure, accurate, and transparent connections and communication among consumers and businesses as they move more of their offline lifestyle and operations online.
Oil of the digital rigs
In 2006, British mathematician and architect Clive Humbly is said to have coined the phrase, “data is the new oil.” These words heralded its value but at the same time pointing out how it needs refining to truly become useful. This phrase summed up the rising value of data — and the need for people and resources devoted to refining it — in a world of rapid digitalisation.
Since then, this phrase has itself been refined for various industries and businesses. In particular, technology and software companies, at the forefront of the revolution, have been reaping the benefits of scale when it came to data processing. It has become part of the tech startup ethos to acquire and leverage on data — be it to tap into network effects and build moats around their user base with this data. In 2017, the Economist brought to forefront the effects of technology companies dominating the economy with the data they had been able to amass.
Last year we covered how one of our companies, car marketplace Carro is leveraging data it had amassed over its operation in Southeast Asia. With the data, it expanded its business beyond a marketplace into financial services for car owners and sellers. This not only strengthens incentives for their users and partners to stay on the platform, but has also kept the business running during COVID19 as marketplace demand dropped.
Fruits of the digital farms
The “data is the new oil” paradigm stemmed from the idea that a digital economy makes it valuable. In emerging markets like Southeast Asia, data is not just a non-renewable resource like oil, made available and valuable with the right technology.
Having seen how digital tools can turn data into firepower, startups tackling largely offline markets are reverse engineering the process — using data to create digital tools and sustainable businesses from square one.
Metaphorically, it has evolved one step further from a non-renewable product to be drilled from the depths of the earth to become a sustainable, renewable resource that is both cause and effect of digitalisation. Technology companies have, from one point of view, become digital data farms, not just rigs drilling for data — where data is planted, harvested and whose fruit are then used to produce more data.
For AwanTunai, data has been a key component of their business from day one. CEO and co-founder Dino Setiawan explains how they worked with FMCG wholesalers to obtain and digitize transaction data on micromerchants to provide access to financing for the latter. Eventually the mine they had struck attracted banks, institutions, and other investors to support them with capital.
The data they had discovered in the downstream supply chain was inherently valuable already. What Dino and co-founders did was develop the infrastructure (aka the farm) to make it valuable at scale, and it has since allowed them to explore other services for micromerchants and wholesalers. The data was enabling adoption of digital services in a valuable way.
Data also drives retention. Customers value transparency especially in traditionally opaque transactions, and data-driven efficiency can be a reliable way to keep partners and suppliers onboard. Sayurbox co-founder and CEO Amanda Susanti shares how visibility over the quality of the fresh produce they source directly from farms is crucial to the consumer experience. For Sayurbox’s own supply chain, being able to monitor supply and demand data allows them to be more flexible when it comes to distributing the fresh produce across different business lines. This reduces waste and helps farmers get a better return on their produce — key to retaining them on the platform.
Sustaining the highways of the digital economy
In the COVID19 pandemic, the role of data in the digital world is once again evolving. As more business and day-to-day activities are forced to go online, data is no longer simply a result nor a tool of digitalisation. The digital economy in the wake of COVID19 will be populated with more individuals and organizations operating online. This presents an opportunity for business in particular to make processes more efficient and secure at scale, especially when it comes to information flows. Leveraging on the ability of data to scale the capabilities of digital technology will be critical to achieving this efficiency and security.
Curation mechanisms will play a larger role in the digital economy, especially now as the world not only battles with a pandemic but an “infodemic” as well. Think of these mechanisms as border controls in the highways of the digital economy.
Social media platforms are being pressured to play a more conscientious role in curation, as many people now locked up in their homes depend on internet platforms for up-to-date information. Tech companies are also playing a direct role in the pandemic response by supporting governments through realtime contact tracing and quarantine monitoring.
This brings to question the standards with which technology platforms obtain and curate the data they amass from users. This has been a key issue of internet regulation in the past decade, and privacy laws have since been erected, but the years that follow will likely see more action being done to either set up these border controls or take them down.
Highway maintenance and protection
The digital economy also needs to accommodate more activity and this means being able to manage and secure data for an even larger population. Enterprise software applications are facing this challenge as they take in more customers. Organizations, now with the challenge of managing operations online, are also thinking of ways to keep communication flows intact and efficient.
Now organizations will be thinking more about how they can integrate a data strategy into their operation, or leveraging on digitized data to make once offline transactions more efficient. Think of this data strategy as paving the roads for online communication and operation. The more paved the roads are, the smoother the flow within an organization. One can expect more players in the race to provide tools that can help organizations manage data securely and efficiently.
Increased visibility and optionality
Finally, as more people do their day-to-day activities online or with the help of a digital tool, from exercising to grocery shopping, visibility and optionality features will be a critical value proposition. Adoption will be less about getting people online as it will be making the online experience optimal for them.
Technology platforms will have to be more conscious in helping their consumers make informed decisions. These also play into how they can make an even more personalised experience for each of their users. Faced with criticism for using China data storage centers, Zoom has recently offered the option for paying customers to select their own data center. Marketplaces with physical storefronts like automobile shops and even real estate are also exploring virtual stores and experiences to create visibility on their products online.