Data INPUT: Collect or Buy ?


Collect or Buy ?

DATA INPUT: is the business worth it?

When decision is needed for a data driven project to go ahead, a business plan is made with:
-expected revenues from all services using the data input at stake
-complete playout of anticipated business launch and uptake, with scenarios, which determine the maximum acceptable price one would pay for the data input, either as:

-The cost of collecting the target data set
  • Specific sensor and infrastructure needed
  • Services consumed (network, installation, site visits)
-Alternatively, the price paid to a third party collecting or having collected the target data set

Act now or wait?

If you are in no hurry, Moore’s Law which drives the evolution of capacity/price in the digital domain, will reduce significantly over time the digital electronic/Information Technology/Network costs of getting the input data. In the long term, this cost decreases exponentially, whereas other costs involved in this, which are non-digital, brick-and-mortar, real-world dependent, may not decrease in the same way.

Competing firms

In the heat of competition, or with the pressure of needs, one may not have the time to wait for the cost of data input to decrease as above. Furthermore, competitors may not want to share critical data leading to competitive advantage in their view. I saw with my eyes the competing programmes of French Television not wanting to share the image capture and satellite uplink during the Euro92 event in Norway, leading to duplicated infrastructure and services operated for them by the leading French network operator.
In some cases, sharing is not allowed: Competition lawyers advise firms on Anti-trust rules for business touching the territory of the USA in any way, and EU Competition rules, or any other depending on the region where the distributed business takes place.

Sharing data

If data can be shared, and organisations are willing to share the same input data sets, economic agents in the data value chain participate to a data market place.
This can take in particular two forms:
-Open Data: where one collector, collects data sets on behalf of all, and grants access for free, however possibly with some contractual conditions for the allowed domain and scope of use.
-Commercial Data: a license is granted to data users by the data collector, with a fee, and contractual conditions of use.

 Further reading:


 Several detailed models, withe roles descriptions and equations, can be found here

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