The five key types of IT data do not necessarily each contribute the same amount of value to your company (value here being defined as enterprise value, or the value of the company at sale).
Each type of data creates either linear or exponential enterprise value for your company. Either an additional data point increases the value of the company by the same amount or each additional data point increases the value of the company by more than the last data point.
The distinguishing factor between whether each type of data creates value linearly and exponentially is the extent to which the data directly impacts the experience of the entire customer base. Some data only increases the value of the experience for the user (or more broadly an identity) that provides; other increases the value for all of the users of the service. Simply put, if the data contributed by one user (identity) creates value for all of the other users of the service, it likely creates value exponentially.
A singly user’s activity, ratings, social graph, or other can make a service more valuable for every other user on the site.
While to date I have not come across a situation in which the identity data type can create exponential value in and of itself, the other four types of data can create either linear or exponential data depending on how they are used.
- While descriptive data used as part of my account profile (that only I can see) creates linear value, the description of another service provider in a directory creates exponential value.
- A feature that merely tells me the last time I logged on creates linear value; a service that tells customers which mattress was purchased the most often creates exponential value.
- A site that remembers my favourite restaurants creates linear value, whereas a site that aggregates everyone’s preferences to rank restaurants creates exponential value.
- A service that keeps track of my contacts creates linear value, one that lays out the broader social graph (showing my contacts who else I know and so on) creates exponential value.
Understanding this dynamic is of critical importance if you are starting an IT company, because after you have surveyed the available types of data in your service, this framework should enable you to ensure that you are leveraging that data optimally.
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