DATA IS THE NEW WHEAT

For a while now people have been talking about data as the "new oil". Based on what I know about oil, I find this highly unlikely, yet data has been associated with the lucrative term "mining" since the 90's already.

To me, mining tends to be associated with lucrative resources*, like Gold, Diamonds, Cobalt and Oil - the motherload of them all (*other less glamorous mining activities exist)...

Can data add large amounts of value? Yes. Can it inform critical business decisions? Yes. Can it be used to offer new products and services? Yes.

However, as is often the case, everyone is keen to jump on the big data and AI bandwagon on the premise that data is valuable like oil.

I like the oil analogy as it exposes some key shortcomings in this type of thinking. Oil is a highly valuable commodity, largely due to the fact that it is controlled by a cartel (much like De Beers and diamonds - a topic for another forum). So one is not simply paying for the cost of exploration, discovery and extraction of oil. There is a literal boat load of oil out there but the supply is deliberately throttled to keep prices high (especially by nations where the production cost is actually super low). So what does this have to do with data!?

Well there is no data cartel - in fact - data is everywhere and therefore it intrinsically has lower value. That is why when I was walking through the wheat fields near my house the other day I concluded data is more like the new wheat...

Much like data, there is an almost limitless supply of wheat and more can always be produced. It is not hidden under rocks or deep out to see. It is in plain sight. However for wheat to make a farmer money there are a lot of headwinds. Rain or irrigation is required (too much or too little creates problems), pests can wipe out whole years of production. The farmer also needs to harvest significant volumes of wheat to break even or make a profit. In some countries the price of wheat is actually capped as it is deemed a staple food (so the opposite of oil in terms of price).

So before I go down an analogy rabbit hole, what is my point :)

Just like wheat farming, when it comes to data:

• Sensible expectations on data investment returns need to be set
• Good returns can be made, but it requires big investment and perhaps there will be "seasons" where there is little or no return and so the strategy needs a long term vision and commitment. There may also be bumper seasons at times
• It is not like oil where once a good well is setup, high value product literally just flows. Each season will bring its own challenges and the value may be questioned at times (I've heard farmers questioning why they do it more than once!)
• I have never personally tried to find funding for a wheat farm, but I am sure the investment case is far more tricky than promising investors millions from an oil well ;)

So before I stretch that too far....

Summary: Well groomed and tended data certainly has value, but it is going to take funding, time and effort to harvest it ;)