Bring Your Own Data (BYODA)

Note for Elon Musk: the reason why I decided to fake your original tweet is simply to attract audience and make everyone aware about the positives and negatives of BYODA (Bring Your Own Data).

In January 2020, WhatsApp decided to change its Terms & Conditions. Elon Musk was not happy about the changes and therefore recommended a safe alternative, Signal. In the original version of his January 7th tweet (left side), Musk advised to use the Signal Messaging App.

As a consequence, some of the readers (humans or robots) decided to invest in a company called Signal Advance. It's likely that many of them followed the information sourced from their provider of "Alternative Data".

Signal Advance's shares climbed from 60 cts to $7,19 in 24 hours.

What will happen to the professionals or the fund managers who decided to invest on Signal Advance? Who will be held accountable?

Introducing BYODA (/?bi? wa? ?? ?da?/)

"Bring Your Own Data" (BYODA) is the practice of allowing the employees of an organization to use their own sources of data for work purposes.

When I started working as a consultant 20 years ago, most of us were using proprietary sources such as Factiva, Hoovers or magazines' subscriptions. Research centers were in charge of sourcing and curating these sources, we were all happy about it. Bringing our Own Data was not technically possible at this time.

In the meanwhile:

• Google started to crawl the surface web that we all use as consumers, and we all became addictive of Google search (despite the time wasted).
• LinkedIn, Twitter, Glassdoor and Medium grew and became major sources of insights for (too) many professionals.
• Cloud providers now allow us to buy 3rd party datasets that they store and process, and that we can easily use into (their) preferred analytics bench.
• Government and public agencies massively invested in Open Data programs, letting us think that good data is available for free (but preparing Open Data has a cost).
• The Data economy steadily grew, with a huge diversification of data products, use cases and providers. This market now generates more than $250B per annum across 200,000 providers (do you know all of them?).

In a nutshell, "Bring Your Own Data" (BYODA) is not a new practice. But it's time to think about the radical implications that BYODA will have on your performance and on your strategy, in 2021 and beyond.

Why? Because all sectors will live blind in the post Covid period and because companies (and governments) will require external lenses to take decisions. Those who master the sourcing of external data will gain a massive competitive advantage against others.

According to Forrester Research, more than 90% of employees want their company to increase spend on external data and information services

BYODA is like cholesterol

Our body needs cholesterol to build healthy cells, and cholesterol by itself is not a bad thing.

The issue with cholesterol is the process of oxidation, that transforms cholesterol into a threat for your body in the long term. The problem is that "long term" depends on your own body and genes, and is hardly predictable: "long term" can be decades for John, years for Mary and months for Luc.

The same happens with BYODA. Allowing your employees to introduce their own sources of external data can be extremely beneficial for your organization. But leaving them in complete autonomy will endanger your company (a "Data oxidation").

Data obesity

Your company will not count expenditures in external data and information services. Information services providers will sell twice the licenses to different departments. Licenses and access rights will be used at 20% of their capacity (would you hire people and let them work at 20% of their capacity?).

Your investors will ask you to take control of all "indirect costs" in the post Covid context. The only solution available will be the "gastric band", as you will not have a 360° view on expenditures. Expect major consequences in the short term on your operational performance.

Data sclerosys

Employees will create their own silos of external data. Access logins and password will be kept in secret on post-its or encrypted excel files. Only the most profitable units will be allowed to allocate budgets on external data.

The unit working on your "next AI driven business" will be allowed to only hire data scientists and not buy external data. Data scientists will leave because the internal data is scrapped, and because they do not have the budget to acquire external data.

Data stroke

Employees will buy external data on their own. Your approval process will be focused on spend approval. Your legal department will be saturated with demands for new providers. It will take so much time to contract, that employees will neglect the reading of terms & conditions, once the purchase order has been signed.

Suddenly, one of your provider will threaten your company because one of the data product has not been used in a proper manner by one of your employees. A 6-digit penalty will land on the CFO desk. Also expect reputational damages for the communication department. And the stroke will ultimately happen, in a decade, in a year, in a month... or on next week.

Ley BYODA be your good cholesterol

Buying external data & information services is not like buying goods or professional services.

There is no standard price, there is not daily rate. There is no property right, but rather access rights. One single source might have dozens of use cases across your organization. And the pace of innovation is extremely fast, as well as mergers & acquisitions that make it very hard for normal people to keep a good culture on Data providers.

From my experience with hundreds of companies, most mature BYODA companies share these four following patterns:

An internal network of data champions, with an expertise on specific contents and data providers.

Data champions grow the awareness and the appetite for external data. They ensure the reuse of existing sources and foster compliance.

Self service tools to search and browse the library of external data, and to easily acquire new ones.

Many people ask me about the relevancy of data marketplaces: these lead to data obesity, make sure you keep control on contents and recommendation engines.

Deep capabilities in semantics.

Taking advantage of external data requires a deep understanding of the "meaning" and "description" of external data products. Because they master semantics, most mature BYODA companies have a higher number of use cases per data product ; which maximizes their return on investment.

Data providers by themselves.

Acting as a data provider is the most optimal way to learn about the economics of data and to navigate on the value chain. Being a data provider does not obviously mean "selling APIs", you can also sell reports.

One last thing: lets us watch your financials.

From our estimates, spendings on external data account between 0,4% and 2% of net sales depending on sectors and company sizes.

Add to this the cost of people (knowledge workers, research analysts) and the platforms (cloud, analytics bench) required to turn data into knowledge, and you will end up with 5-10% of your profits invested on external data.

Are you ready to become a BYODA master?

Mathieu is the co-founder and CEO of Starzdata. Starzdata's self service platform accelerates the access to millions of external data products and fosters reuse. Our 360° smart dashboard helps large organizations and data providers grow long standing relationships.