Highlighting the Value of Open Data: The McKinsey Report
By Ian Kalin
Open data recently received a glowing endorsement from the most successful consulting company in the world: McKinsey & Company. In a McKinsey Global Institute (MGI) report titled, “Open Data: Unlocking innovation and performance with liquid information”, MGI reports explains how open data can help liberate $3 billion to $5 billion of economic value from a handful of sectors.
Major studies like these from MGI are valuable. They provide validation for skeptics, help active participants understand the broader marketplace, and identify new opportunities for entrepreneurs. As the professional world grows in its complexity, more and more people are relying on consulting firms to bring some order out of chaos and I believe it is fair to say that McKinsey sees opportunity for themselves in this evolving open data ecosystem.
In full disclosure, I am one of the contributors to this MGI study, though I did not see a complete version until it was made public. In reading the final 116 page product, I must confess I am left feeling frustrated because I know the average civic innovator probably won’t know how to begin carving out a piece of the $5 trillion pie. The reader isn’t left with a sense of “Here are the things that I can do today.” There is short sentence on the impact for governments, “An important first step is to set priorities for data release that are based on potential value, rather than ease of ‘opening’ the data for sharing.” But what exactly are those datasets? What have others used? To address these questions in a different way than MGI addressed then, I submit Socrata’s “Top 10 Open Datasets” and the “Open Data Field Guide.”
McKinsey had 2011 revenues of roughly $5.3 billion, equal to the combined totals from its two biggest competitors (Bain & Company and the Boston Consulting Group). According to The Economist, McKinsey spends $400 million a year on “knowledge development” and its “university-like capabilities.” But much of this research goes to proprietary data. So why then would this successful behemoth tout open data as a good bet?
The short answer: with open data, rising tides can raise all boats. As a benchmark example, Google commissioned the Boston Consulting Group to publish a study on the economic value of geospatial data. One would think that Google already had an internal sense with their wildly successful Maps platform. But with Google as with McKinsey, showing thought leadership in addition to product leadership can support an entire sector. MGI’s report focused on seven sectors and shows that the use of open data:
Holds large potential economic value
Enhances the impact of data
Creates multiple business opportunities
Benefits consumers even more than businesses
Entails business risks
Requires governments to play a central role
Of course, we recommend you look to the actual MGI study for the complete picture.
MGI’s landmark report on open data is a major milestone for global open government initiatives. The depth of analysis across a diversity of economic sectors provides convincing evidence that open data presents extraordinary economic potential. As committed stakeholders within the ecosystem, Socrata will continue its support for those seeking to extract value from open data.