The unbearable difficulty of utilising open data

Why does not money grow in trees? Why is it so difficult to generate new business from open data, even though new interfaces are opened at an accelerating speed?

Cities have been searching for new ideas by organising competitions for open data utilisation, hackathons and by active communication. Someone must have ideas for generating new business based on open APIs!

In its simplest form, a new product or service provides a user interface to open APIs, but how valuable do users perceive it, and would anyone be willing to actually pay for it? Business models create their own challenges, but it is no less challenging to protect the idea. A simple idea is easy to copy, and in a competitive situation, a blooming business may easily die out.

Expanding the service to other cities poses yet further challenges. Different cities have different schedules for opening their data repositories, and unfortunately their dreams of expansion cannot be fulfilled by a scheduled roadmap for open data.

Clever data visualisation alone is not enough to create an innovative service. For example, data returned by a real-time API reveals the current situation, but, for example, the current location of snowploughing equipment is not sufficient to inform the user whether or not a certain area has been ploughed. Collecting data to an individual data repository to serve a more complex logic and analytics drives up the costs of the necessary infrastructure. When no-one is willing to pay for the costs, many interesting ideas end up in a drawer, on top of the pile of other good ideas that never materialised. When a company only utilises open data in their own business, many of the challenges are easier to solve. A company can define the added value to their business, and make an informed decision about the cost-efficiency of investing in data collection. Since the added value is usually tied to the improvement of the competitiveness of the business, these innovations are often treated as business secrets and not shared with the public.

In order to speed up the capitalisation of open data, cities could share their public feedback to companies. If certain services are high on demand, companies are increasingly interested in developing corresponding services. Should users pay for the service, or is the data generated from the use of the service valuable to some agents? Businesses that offer these services need to be able to come up with new revenue models, since service concepts alone are not enough to generate new business.

Jan Borgelin
Empirica Finland Oy Ltd.

Jan Borgelin