The Profitable Potential of Data Productization

DATA PRODUCTIZATION: EXAMPLES FROM LEADING COMPANIES

There are myriad ways to monetize data, including leveraging it to enhance an existing product and/or optimize the customer experience (smart companies do both). A good example of this is Amazon’s recommendation engine, which aims to increase revenue by selling more of the company’s own products to customers already on their site.

Companies can also monetize data by leveraging existing information to create products for new customers. For example, FICO (initially Fair, Isaac and Company) has evolved in how they generate revenue from the data they use to power their main offering—credit scoring.

FICO started in 1956 as a company that developed algorithms to show consumers’ past behavior, then employed predictive analytics to determine their level of credit risk and sell that information to lenders. By the early 1990s, they used artificial intelligence (AI) for credit card fraud detection. At present, their technologies drive 65% of all credit card decisions, with large financial institutions relying heavily on this information.

In 2016, FICO unveiled the Analytic Cloud and the Decision Management Suite (DMS), delivering predictive analytics at a lower cost. It also released a comprehensive suite of new B2B software tools for customer credit, marketing, fraud, cybersecurity, and compliance based on the data collected to generate credit scores. Since launching the Analytic Cloud and the DMS FICO has experienced impressive sales growth year over year, growing earnings from $881 million in 2016 to over $1.1 billion in 2019. While their FICO score business is also still wildly lucrative, DMS has been the most rapidly growing segment.

Of course, FICO is dependent on data—it’s intrinsic to their business. But what about companies where data productization opportunities aren’t so obvious?

For example, when you think of those most likely to be an innovative data company, an automotive parts manufacturer is probably not the first idea that comes to mind. However, one company in this industry created a new revenue stream by turning their buyer data into a data and analytics solution that helps their distributor partners sell more inventory. Distributors subscribe to the service, which provides direct revenue to the parent company, and the insight it provides helps them sell more of the company’s primary products.

Analytic Cloud and the DMS FICO has experienced impressive sales growth year over year

CapTech has worked on data productization efforts like this with clients as well. We recently worked with a sports industry leader, developing standardized, repeatable, and reusable APIs that deliver sports statistics to a wide range of customers, including those in media, betting, and technology. These API-driven data feeds provide sports data to customers—which includes but is not limited to sports technology firms, broadcast partners, and other sports websites—within a tiered pricing and access model. While historical data might be offered at a lower price point, any data from real-time sporting events would be higher.

In addition, CapTech developed a streaming solution that allowed the near instantaneous delivery of data. In this instance, the sports company’s customer was a gaming syndicator whose goal was to enable real-time sports gambling. Now the sports organization is able to process, enrich, transform, and deliver data within one second from the time it is recorded. Every bit of the latency in the streaming process is measured: from devices to the on-site mobile data center, mobile data center to cloud service, cloud service to database, database to betting service.