The Business of Data

Commercial Opportunities and Social Challenges in a World Fuelled by Data

Martin De Saulles

• Editorial: Routledge
• Año: 2020
• ISBN:
  9780429762734
• Edición: 1
• Categoría: Commerce
• Categoría: Commerce Général

This book is about the rise of data as a driver of innovation and economic growth. It charts the evolution of business data as a valuable resource and explores some of the key business, economic and social issues surrounding the data-driven revolution we are currently going through.

Readers will gain an understanding of the historical underpinnings of the data business and why the collection and use of data has been driven by commercial needs. Readers will also gain insights into the rise of the modern data-driven technology giants, their business models and the reasons for their success. Alongside this, some of the key social issues including privacy are considered and the challenges these pose to policymakers and regulators. Finally, the impact of pervasive computing and the Internet of Things (IoT) is explored in the context of the new sources of data that are being generated.

This book is useful for students and practitioners wanting to better understand the origins and drivers of the current technological revolution and the key role that data plays in innovation and business success.

1

INTRODUCTION

We are increasingly told that we are now living in an information society, that data is the new oil or that big data is going to change the world. It is certainly true that we have never been surrounded by so much data, much of it generated by our everyday activities. Scarcely a day goes by without another news story about another data breach suffered by companies and governments, either through human error or as the result of determined hackers. However, the story behind why this data was created in the first place and how it is used by businesses and public organisations to make profits or improve our daily lives is less frequently told. This book attempts to answer these questions and show that data has become an integral part of all developed economies, driving innovation and fuelling industries. As long as humans have engaged in commerce, the capture, storage, processing and exchange of data has been a vital element in the transaction process. Over the last 100 years it has also become an industry in its own right. In the last 20 years this industry has grown to the extent that many of the world’s largest and most profitable companies are essentially data-driven entities. Appreciating these changes and the driving forces behind them is essential for anyone wanting to understand business in the twenty-first century.

Chapter 2 considers the history of data from a business perspective and traces its origins back to the earliest known forms of writing. It then traces the evolution of data as business resource from the first stock exchanges of the eighteenth century, through the rise of managerialism in the early twentieth century up to the post-war computing era.

In Chapter 3, the rise of the internet and the companies spawned from this digital revolution are explored with the distinct phases of this period explained. It shows how the capture and exploitation of data emanating from internet users has been central to the rise of the internet giants we know today. These companies and their data strategies are considered in the context of the different business models each of the companies has developed.

Chapter 4 goes into more detail on data-driven business models, their configuration and the trends emerging from a maturing internet economy. The economics of information and how they differ from the economic forces governing more traditional business assets are explored in the context of innovation.

The rapidly developing challenges facing regulators and policymakers are described in Chapter 5 and recent examples of data misuse are highlighted to illustrate this growing problem. Just as data presents new opportunities and challenges for business to exploit, so regulators are faced with a highly fluid and complex landscape where the use of data requires legislation to protect individuals in the same way as the financial sector.

Finally, in Chapter 6 the future of computing is considered with a focus on pervasive computing and the Internet of Things (IoT) and the implications of this wave of innovation for data both from a business perspective and a social one. As computing becomes more embedded in our daily lives and the data these new technologies generates becomes the driving force for their deployment, data will emerge as a defining resource of the twenty-first century. As this chapter illustrates, it can be used to transform our work and social lives as well as our personal health but stricter controls will be needed to ensure the balance between the demands of business and the privacy of individuals is secured at an appropriate level.

2

ORIGINS OF BUSINESS DATA

Some of the earliest records we have of writing and notation were created to record business transactions and financial accounts. Going back thousands of years, wherever goods and money changed hands there were often tools available to note these exchanges and, in a few cases, these records still exist. In 1929, Julius Jordan, a German archaeologist, discovered a trove of clay tablets over 5,000 years old in what is now Iraq. For nearly 50 years the markings on the tablets were a mystery until it was discovered they had been created to record the receipt and then sale of commodities such as grain, sheep and honey. What had been thought by many historians and archaeologists to be early forms of poetry and personal correspondence were actually accounts created to provide a note of what had been bought, how much had been paid and what was still owed (Harford, 2017). As these tablets and tokens were studied further it became clear that they were more sophisticated than originally thought. Recording the sale of four sheep involved the sheep symbol being pressed four times into the clay but larger transactions would take up too much space so a shortened set of symbols were created where a circle represented ten and other symbols indicated larger amounts, allowing large numbers into the thousands to be represented. According to Harford (2017), one of the tablets recorded a demand for war reparations amounting to 4.5 trillion litres of barley, approximately 600 times the current annual US production of barley.

Over time these records grew more sophisticated and by 1,800 bc in Babylon the so-called Code of Hammurabi was in use, which formalised the first known rules around the granting of credit. The code set the maximum amounts of interest that could be charged with, for example, loans on grain having a limit of 33.3% per year and silver 20%. For these transactions and loans to have legal weight, they had to be witnessed by a public official and formally recorded as a contract (Desjardins, 2017). Credit notes were extensively used in ancient Rome, with Cicero noting in 50 bc that his neighbour had recently purchased 625 acres of land for 11.5 million sesterces. As Desjardins (2017) notes, that number of sesterces would weight more than 11 tonnes and be an unfeasibly large amount of coin to transport through the streets of Rome. Therefore, the transaction would have relied on a formal credit note to complete the purchase.

European explorers and the resulting colonial expansion into the Americas, Africa and Asia stimulated the need for credit to fund these expensive forays and the modern banking industry started to take shape. By the nineteenth century a growing middle class in many industrialised economies extended the rise of credit to individuals, requiring data gathering and processing on an unprecedented scale. This continued to grow throughout the twentieth century up to the present day and now forms a cornerstone of the financial data sector.

As business’s reliance on data gathering and processing grew, so did the tools and techniques to help them in this process. Access to data, particularly in the financial markets, could prove a significant competitive advantage for companies that were able to have sight of commodity prices or significant news before their rivals. News reporting services such as Reuters and stock market data feeds emerged to fill this demand for information and the business data sector started to take shape. A core task for any business is the ability to make informed decisions based on experience but also using relevant data as a core input in this process. As trade and commerce has expanded throughout the previous 200 years across developed economies, systems have been required to ensure companies can be paid for their products and services. What started in Mesopotamia over 5,000 years ago with clay tablets has now evolved into a multi-trillion-dollar industry underpinning how we work and live. The following sections in this chapter will explore how new technologies such as the printing press, telecommunication networks and computing have been both drivers of innovation in the business of data as well as having been shaped themselves by the collection, storage and exploitation of data. Human activities in public and private spheres leave traces which are recorded for a variety of legal and commercial reasons and have a monetary value of their own. The ingenuity of individuals to create profitable enterprises around these data streams will become apparent, as will the social challenges that arise from this activity.

The rise of the printing press

As we have seen, the formal notation of information into clay tablets and later manuscripts made from papyrus, velum and paper can be traced back thousands of years. However, one of the key limiting features of such techniques and media is the time-consuming nature of their production. Each must be written by hand, restricting the uses to which recorded data can be put and the types of people given access to it. The rise of the printing press began a radical transformation in the volume and types of printed materials which could be produced. Early printing presses typically relied on carved wooden panels to be painted with ink and compressed against printable media in a process known as block printing. While more efficient than handwriting for the ‘mass’ production of information, block printing is limited by the nature of the wooden panels only being able to print the same text or illustration each time they are used.

At the end of the first millennium ad the first moveable-type printing press was developed in China where individual carved letters could be set and re-used, allowing a much faster and more flexible system of printing. In the fifteenth century in Germany, Johannes Gutenberg developed the concept of moveable type and replaced the wooden letters with metal ones. Incremental innovations to Gutenberg’s printing press were made by fellow German Peter Schoffer, whose version of The Book of Psalms incorporated a three-colour title page.

While the more rapid and accurate printing of books and other documents made possible by the moveable-type printing press led to a vibrant printing industry across much of Europe, it is the social, political and economic implications which are most interesting. Less expensive and therefore more books meant ideas could be spread far quicker than previously, and this proved a challenge to those in power, particularly the Church. Pope Alexander VI decreed in 1501 that anyone printing texts without the Church’s approval would be excommunicated. This threat to the authority of the Catholic hierarchy was realised a few years later, when books by Martin Luther and John Calvin split the Church and fragmented the power of religious authorities.

As ideas spread so people began to question many perceived truths, and not just within the religious realms. The so-called Age of Enlightenment was fuelled by the ability of scholars to share information and knowledge and the origins of science as a discipline emerged. According to Rayward (2014):

Of central importance in understanding the emergence of the Gutenberg-based information and communications infrastructures and what these infrastructures supported was the fact that they were an integral part of the general secularization, modernization, and industrialization of Western capitalist economies.

(Rayward, 2014, pp. 682–683)

The mass production of printed materials went hand-in-hand with the origins of the Industrial Revolution across much of Europe. As economic activity grew with the move from agricultural to industrial development, so the need for enhanced record keeping also increased. Industrial methods and innovation were also applied to the printing press itself with the development of new steam-powered machines and rotary presses that could print millions of copies of a page in a day. At this scale, it became possible to print mass-distribution newspapers and, coupled with the rise of railways in the mid-nineteenth century, the national press was born.

As books became cheaper to produce and systems of education were developed in many industrialised economies, reading moved from being a luxury for the rich or those in religious orders to a mass pursuit. Book publishers catering for all tastes began to flourish and a new industry emerged.

Many of the origins of the data business can be traced back to the era of mass printing. For the first time information was not a scarce resource guarded by the chosen few but was becoming a common good available to almost anyone. Entrepreneurs were quick to spot the potential for building businesses around this new resource. Newspaper publishers realised the profits that could be made through charging pennies for each copy but also then selling their readers’ attention to advertisers desperate to promote their products to a growing middle class. Directory publishers found a profitable niche in providing printed guides to local businesses and book publishers found a ready market for novels of all types.

This emerging industry for printed materials of all types also played an important part in the transformation of how businesses were managed as record keeping emerged as a distinct practice and more formalised management techniques began to be applied across the industrial landscape.

Managerialism and record keeping

The application of ‘scientific’ methods to the management and organising of business operations started to take hold in the early twentieth century as larger companies expanded their operations across ever-wider geographic areas and employed many thousands of people in factory and office settings. Controlling these sprawling businesses to ensure profits were being maximised was a challenge and the rise of mass production, particularly in the automotive sector, only accelerated this problem.

A founding father of scientific management was F.W. Taylor (1911), who relied on the rise of record keeping to underpin his ideas on how a workplace should be run.

Under the best day work of the ordinary type, when accurate records are kept of the amount of work done by each man and of his efficiency … And this one best method and best implement can only be discovered or developed through a scientific study and analysis of all of the methods and implements in use, together with accurate, minute, motion and time study.

(Taylor, 1911, p. 8)

Taylor’s work, as well as that of other pioneers of scientific management techniques such as Frank Gilbreth and Harrington Emerson, applied formal methodologies including time and motion studies of workers to the process and organisation of work and working practices. These techniques relied on careful monitoring and record keeping which generated new classes of business information that needed to be stored in ways that allowed ready access for managers and administrators. At the same time, innovations in the technologies for creating, sto...