25.10.2017 | News

Data revolution and platform economy to change business

The new data economy will revolutionise business models and concepts. Solita’s recent Think Tank report urges Finnish leaders and companies to understand the potential of data and platform business. Smart use of data will cause revolutions in a number of businesses. “The business world is about to shift to a platform economy, while many Finnish companies do not fully understand the strategic significance of data,” says Pekka Ahola from Solita.

In spring 2017, Solita, a Finnish digital business consultancy and digital services company, formed a Think Tank group to analyse the current state and future of data business in Finland. Members of Think Tank are Pekka Ahola and Katriina Kiviluoto from Solita; Katri Harra-Salonen, CDO at Finnair; Juhani Nummi, SVP of business development at YIT; Veli-Pekka Ääri, VP of communications, marketing and digital services at the S Group; Kati Sulin, CDO at DNA; Timo Seppälä, chief research scientist at Etla and professor at Aalto University; Petri Parvinen, professor at Helsinki University and Aalto University; Jussi Olkkonen, service designer at Palmu; and Kari Onniselkä, managing director of Ramboll Finland. The group’s results are presented in the report “The Data Revolution and Business”

The new data business environment is complex and difficult to picture for many people in charge of business operations. However, companies need to adjust to the necessary changes in the operating culture and ways of thinking.

“Data business cannot be planned all the way–it involves learning by doing. Organisations must boldly experiment and test new things,” says Pekka Ahola from Solita.

Data business has only started

Currently, Nordic companies are well aware of the significance of data use. However, practical measures to build new data business are slow to start, as companies do not have any data strategy. Basically, companies have not yet realised the strategic significance of data for their business operations. They are not accustomed to regarding data as a competitive factor.

“Data-driven thinking is always based on the customer’s needs. In order to thoroughly understand customer needs, companies need extensive sources of data, expertise in analytics and understanding of people,” Pekka Ahola says.

Get ready for the platform economy

The application of data may become a core business in nearly all fields. Digitalisation, globalisation, a sense of community and the sharing economy are major phenomena that are having comprehensive effects on culture. The group encourages every company to ask themselves how they could use data to fulfil these requirements. Today, the amount of data generated in two days is equal to all the data created in the world until 2004. There is no end in sight for this exponential growth.

New digital platforms are often more cost-effective than traditional business models, and also better ways to serve customers, as all parties’ operations are centred around the use of data. In platform business, companies may not be manufacturing anything. According to the report, the idea behind platforms is rather to enable cooperation and to produce added value. In the platform economy, companies can be divided into those that run and manage platforms and those that make effective use of platforms.

Eight aspects of data business development

Solita’s Think Tank group compiled eight key aspects of data business development:

  1. Data is transforming all business. The world has become data-driven. Companies that do not use data inventively have no future. Data helps to boost current business and make better decisions. Above all, it helps to build completely new business. The application of data will become a core business everywhere.
  2. Companies need a data strategy. The ability to inventively use data offers the most significant competitive edge. Companies must have a clear and inspiring data strategy. It must indicate how and why the company will use data to make better decisions and build new business.
  3. The quality and freshness of data are the key. Up-to-date data is valuable. The quality of data is significant – outdated and irrelevant data may lead decisions in the wrong direction. What if your competitors have more coherent and more recent data?
  4. Data needs to be processed. The data economy is not about selling raw data but about processing data into new business, into products and services. Thinking about data business must be much broader and bolder than simply buying and selling data. The value of processed data is many times higher than that of raw data. “Selling data in itself can be compared to selling tree trunks, as opposed to processing the wood into furniture, for example. The value of processed data is many times higher than that of raw data,” writes Jussi Olkkonen from Palmu in the report.
  5. Data and the platform economy live in a symbiosis. Data business is not the same as platform business, but investing in data business will always strengthen the platform perspective. With time, platforms will emerge everywhere, in every sector.
  6. Management and corporate culture must change. Business executives have not yet deeply understood what data transformation means. New data business cannot be created until the corporate culture and management practices change. In the data era, executives cannot constantly learn something new and believe in the power of practical experiments. The corner office is no longer the fountain of all knowledge.
  7. Empathy is the key in data business. Technology or talented data analysts alone cannot salvage companies. Data is useless without empathy and an understanding of people. Companies need to have a deeper understanding of how people consider value. Companies that can model the worries and concerns of consumers will succeed.
  8. Stop hesitating, also invest in wild cards! The only way to learn about data business is to engage in data business. Companies must have the courage to invest in wild cards. Failures are also allowed. If it turns out that unconventional ideas do not have wings, they can simply be forgotten.

Download the full report

More information:
Pekka Ahola, Vice President, Cloud and Analytics, Solita
tel. +358 50 3644 226, pekka.ahola@solita.fi

Author

Solita