2016 10-11-the value of iot data v011 - short

Hier bitte vollflächig

Titelbild einfügen

ODER

Diesen Text und Begrenzungslinie unten

mit einem weissen Kasten überdecken.

Titel: Zweite Zeile Orange+ fett formatieren!

© mm1 Consulting & Management, Stuttgart/Aichwald

Bild immer

bis zu den

Kanten führen

Connected Business Insight

Quantifying the value of Internet of Things data

1101010101010

1010101011010

1001000010101

0101010101010

1010101010101

January 2017

mm1 – Die Beratung für Connected Business

110101101110001010101001010001001010001010111101010100101010101111111111111100000001010100

101010100101001010101010010100101001010101010101001010100101010010101010101010101010010100

101010010101010010100101001100000000000111111111111100101010101111111110010100110110101101

110001010101001010001001010001010111101010100101010101111111111111100000001010100101010100

101001010101010010100101001010101010101001010100101010010101010101010101010010101010101010

010101010010100101001100000000000111111111111100101010101111111110010100110110101101110001

010101001010001001010001010111101010100101010101111111111111100000001010100101010100101001

010101010010100101001010101010101001010100101010010101010101010101010010101010101010010101

010010100101001100000000000111111111111100101010101111111110010100110110101101110001010101

001010001001010001010111101010100101010101111111111111100000001010100101010100101001010101

010010100101001010101010101001010100101010010101010101010101010010101010101010010101010010

100101001100000000000111111111111100101010101111111110010100110110101101110001010101001010

001001010001010111101010100101010101111111111111100000001010100101010100101001010101010010

100101001010101010101001010100101010010101010101010101010010101010101010010101010010100101

010101010010100101001100000000000111111111111100101010101111111110010100110110101101110001

010101001010001001010001010111101010100101010101111111111111100000001010100101010100101001

010101010010100101001010101010101001010100101010010101010101010101010010101010101010010101

010010100101001100000000000111111111111100101010101111111110010100110110101101110001010101

001010001001010001010111101010100101010101111111111111100000001010100101010100101001010101

010010100101001010101010101001010100101010010101010101010101010010101010101010010101010010

100101001100000000000111111111111100101010101111111110010100110110101101110001010101001010

001010001001010001010111101010100101010101111111111111100000001010100101010100101001010101

010010100101001010101010101001010100101010010101010101010101010010101010101010010101010010

100101001100000000000111111111111100101010101111111110010100110110101101110001010101001010

001010001001010001010111101010100101010101111111111111100000001010100101010100101001010101

2

IoT

Data

Internet of Things data is growing in volume & value, but still

underutilized by businesses, who often think in internal data silos only.

To accelerate the development of IoT data driven business models,

companies need to start aggregating IoT data over more than one

corporate silo and adapt their business case evaluation processes.


Raw Data

Data Market PlaceData

Supply

001001010

101000100

101010101

010010101

010101010

100101010

101010010

101001001

010010101

010100101

010101010

101010010

Data markets are essential for data business models, but

not possible without the ability to define the value of data

3

IoT data driven business models often require data from different sources (i.e. car data + weather

data + petrol price data) or data of a minimum critical mass (i.e. 5% of all car data). Companies

therefore need to start exchanging and trading data, i.e. in a data market place. But to work, any

data market place needs to first be able to value data on both the supply and demand side.

Essential Service

Enables data trading

Enables data aggregation

Payment

Rich data

and Use Cases*

Payment

Data

Demand

Data Valuation

Definition of value of data

Setting of dynamic pricing for

supply and demand


Defining the value of data is also crucial for corporate data

driven IoT business model development processes

4

Unlike data centric companies, old-economy companies typically need to first be able to define the

value of IoT data in order to develop investment ready business cases. The ability to define this

data value is therefore crucial for corporate business model development.

Requires a method to

define the value of data

in order to calculate data

driven revenue

Data-centric companies

Collect

Data

Get Upfront

Investment

Identify

Business

Model

Old-economy companies

Get

Investment

Business

Strategy &

-Case

Collect

Data

Allows for data value

definition at a later

stage and by

experimentation

The approach to IoT business model development differs significantly between the majority of old-

economy and data centric companies.

New Method

Required


Different methods for IoT data valuation exist, the ‘optimal’

method depends on the situation and can change with time

5

There are different methods available to calculate the value of data, the optimal methods increases

in complexity with & depends on the maturity of the market.

Data Valuation Methods

Non Monetary MethodsValue (Importance)

Monetary Methods

Price (€)

Intrinsic

Value

accuracy,

completeness,

accessibility, scarcity

Business

Value

relevance, accuracy,

completeness,

timeliness

Performance

Value

Influence of data on

one or more KPIs

Cost

Value

Expenses for data

purchase &

gathering

Economic

Value

Difference in e.g.

sales with and

without data

Market

Value

Price of data in

market

User

Value

How much is

user willing

to pay

Prudent

Value

Determined

by stock

market

Lifetime

Value

Calculated

by market

forecast

Trade

Value

Determined

by market-

place

Business

Initiative

Value

Schmarzo

Method

Technical

Value

Takes into

account data

quality

Demand

Value

Takes into

account No.

of data calls


The accuracy and value of data valuation increases with the

level of information available about market mechanisms

6

Costs. Evaluates

consumption of material

and immaterial goods

required to collect and

manipulate the data

Value. Reflects the

importance of the good –

for example in form of the

number pull requests for a

data set

Price. Most difficult to

generate level of

information: how much are

certain customer groups

willing to pay for the data or

service generated from it,

in €?

Cost Value Demand Price

Demand. Qualitative

measure of how high the

demand for a good is, in a

discrete range.

hard to obtain informationeasy to obtain information

The more information is available about the specific market mechanisms related to the data, the

higher and more accurate it can be valued. Lacking market information, cost based pricing is the

only available option to value data. The desired option is value based pricing.

potential valuation of data increases with access to information and market maturity


Calculation of the internal value of IoT data based on a

supply & demand model according to mm1

7

The data valuation scheme balances supply & demand and takes into account data quality and the

number of use cases to value data. The method is ideally suited for IoT data market places.

Data Supply Side Data Demand SideData Valuation Tool

Dynamic* Data Valuation

Internal Value(according to mm1)

VVC = ∑1-U (WP x PUC x

WQ x QUC x WS x SUC x WI

x IUC) – CWeight

Factor

Quality of data (Q) Completeness (Qc)

Accuracy (Qa)

Timeliness (Qt)

Frequency (Qf)

Consistency (Qco)

Validity (Qv)

Uniqueness (Qu)

Importance for use case (I)How essential is the data for the UC?

Number of use cases (U) Use cases (UC) data is used in

Share of data for UC (S)Which % of data is used in UC

Price for use case (P)How much demand side pays

Cost of Data (C) Related to availability/quantity

of data. Includes operations.

supply demand

market

equilibrium

* Dynamic here refers to the fact that the value of data changes dynamically depending on time, context etc.

mm1 – Die Beratung für Connected Business 8

Value of sensor data in Berlin Value of sensor data in Rome

VVC = ∑1-U [PUC x (WQc x QcUC x WQa QaUC x WQt x QtUC x WQf QfUC x WQco

QcoUC x WQv QvUC x WQu QuUC) x WS SUC x WI IUC] - C

Highest timeliness

valuation



Low insurance margins in Germany, customer pays less

Reduced

timeliness

valuation

U = 7

High margins in Italy, customer pays more

Sensor data available to insurer within only 10 seconds Sensor data available to insurer only after 24h

Data can be sold for 6 further use cases Data can only be sold for 5 further use cases

Higher insurance premiums result in

higher price data can be sold for

Lower insurance premium

margins result in lower price

data can be sold for

-+ -+ -

+

Value of data in Berlin Value of data in Rome>

Example of internal data value calculation for a usage

based insurance use case (Pay How You Drive, PHYD)

Main criteria for valuation in this hypothetical example are timeliness, use cases & price. Valuation

heavily influenced by insurance margins: the higher the margins, the higher the valuation.

U = 6




Highest timeliness

valuation



High chance of black ice

Reduced

timeliness

valuation

Black ice use case almost never relevant

Sensor data available early, 1 minute after onset of black ice Sensor data available late, 30 minutes after black ice onset

Low relevance results in low price data

can be soldHigh relevance results in high

price data can be sold

-+ -+

Value of data in Innsbruck Value of data in Miami>

Example of internal data value calculation for black-ice

warning use case: the value of data in Innsbruck & Miami

Main criteria for valuation in this hypothetical example are price, timeliness & usage. Valuation

heavily influenced by usage: the more additional use cases, the higher the valuation.

Value of sensor data in Innsbruck Value of sensor data in Miami

Data can be sold for 4 further use cases Data can only be sold for 2 further use cases+ -

U = 5 U = 3


Outlook: How companies can conquer the IoT data market

using different data valuation methodologies

Depending on the IoT data readiness level of the company and its positioning within the IoT

market, different methods can be used to accelerate data driven IoT business development.

A company is in the process of

discovering where novel

applications for its IoT data for

internal use can be found.

Suitable Methods include:

• Intrinsic Data Value

• Technical Data Value

• Performance Data Value

A company already utilizes IoT

data for internal applications and

is exploring opportunities for

novel IoT business models.


• mm1 Data Valuation Method

• Business Data Value

• Demand Data Value

• Schmarzo Method

A company is cooperating with,

setting up or operating a IoT data

market place.

i


• mm1 Data Valuation Method

• Market Data Value

• Lifetime Data Value

Discovery phase1Business Model

Development Phase2

Market Place Development

& Operations3

Increasing utilization of IoT Data Value

To increase the utilization of their IoT data, companies need to rapidly progress to phase 3 of the

IoT data readiness level & start exchanging IoT data across corporate silos to develop improved IoT

data driven business models. The mm1 Data Valuation Method enables them to achieve this goal.


mm1 is the Consultancy for Connected Business

11

Founded by McKinsey

consultants

19 years of experience in Connected

Business.

300+ successful projects in innovation

and transformation

60 consultants support large clients in a

wide range of industries

Unique combination of competencies

covering strategy, product development

and technology

Specialized on technology

and business transformation

in the telecommunications

(TIME) sector

The Consultancy for

Connected Business.

Expansion of consultancy

services from TIME into

industries such as auto-

motive, manufacturing,

banking & insurance.

Founded mm1

Technology (develops

IoT wireless radio

technology).

1997

2000+

2007+

2016


We develop new products and services for the digital world

12

Thought Leadership &

Subject Matter Expertise

Excellence in Top Notch Methodologies

& Ability to Execute

Smart Home &

EnergyConnected Car

Connected Rail

M2M/

Industrial IoT

Connected Finance Substainable

Innovation

Design Thinking

Agile Development

Lean Startup

Platform ThinkingData ThinkingFuture of

Communications


001010100101010100101001010101010010100101001010101010101001010100101010010101010

111111110010100110110101101110001010101001010001001010001010111101010100101010101

111111111111100000001010100101010100101001010101010010100101001010101010101001010

100101010010101010101010101010010101010101010010101010010100101001100000000000111

111111111100101010101111111110010100110110101101110001010101001010001001010001010

111101010100101010101111111111111100000001010100101010100101001010101010010100101

001010101010101001010100101010010101010101010101010010101010101010010101010010100

101001100000000000111111111111100101010101111111110010100110110101101110001010101

001010001001010001010111101010100101010101111111111111100000001010100101010100101

001010101010010100101001010101010101001010100101010010101010101010101010010101010

101010010101010010100101001100000000000111111111111100101010101111111110010100110

110101101110001010101001010001001010001010111101010100101010101111111111111100000

001010100101010100101001010101010010100101001010101010101001010100101010010101010

010101010010100101001100000000000111111111111100101010101111111110010100110110101

101110001010101001010001001010001010111101010100101010101111111111111100000001010

100101010100101001010101010010100101001010101010101001010100101010010101010101010

101010010101010101010010101010010100101001100000000000111111111111100101010101111

111110010100110110101101110001010101001010001001010001010111101010100101010101111

Get connected with the mm1 experts on data valuation

13Connected business as a driver for sustainable innovation© mm1 Consulting & Management

Partnerschaftsgesellschaft

www.mm1.de

Gerichtsstand Stuttgart, PR 720033Bolzstraße 6, 70173 Stuttgart, Deutschland

Telefon: +49 711 184210 - 0| Fax: +49 711 184210 - 99

Dr. Robert Gerlach

Senior Consultant

+49 171 3569 193

[email protected]

Laurenz Kirchner

Partner

+49 151 27605675

[email protected]

Volker Scholz

Managing Partner

+49 170 2457999

[email protected]

Dr. Michael Eble

Managing Consultant

+49 151 26328963

[email protected]

2016 10-11-the value of iot data v011 - short

Data & Analytics

Transcript of 2016 10-11-the value of iot data v011 - short