The Monetization of IT – Cost Center to Profit Center

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The monetization of IT indicates a key shift in the industry: IT is transforming from cost center to profit center in the enterprise. Several major milestones have been achieved in the past few years, including three major ones:

These milestones are indicative of the fact that IT and big data are shifting from a cost center to a profit center in the enterprise. What is driving this change?

What’s Driving the Monetization of IT and Data

The tremendous volume, velocity, and variety of data, and new ways to use it are some of the most important factors driving the monetization of IT and data. The data numbers are astounding. For example, eBay uses two data warehouses at 7.5 petabytes and 40 petabytes, respectively, as well as a 40-petabyte Hadoop cluster for search, consumer recommendations, and merchandising. In another example, Walmart processes more than a million customer transactions every hour. All of this data can be analyzed and utilized to increase sales through methods such as personalization. Have you looked at reviews for a product you might want to buy, only to see ads for that product follow you across the internet? That’s the power of big data in action.

There are also more complex strategies – like the tiered marketing approach used commonly in the automotive industry. A potential customer looks at reviews on Kelly Blue Book or Edmunds for a car they’re interested in buying. The site collects data, both explicit and inferred, such as the potential customer’s location, budget, and the car they’re interested in. This data goes into a huge repository shared by dealerships, review sites, and advertising agencies. Instead of seeing an ad for more reviews, the potential customer might see an ad for the car they’re interested in, for a price within their budget, at their neighborhood dealership. All of this processing and personalization is performed in real-time by leveraging big data, and tactics like this help grow revenues in every industry across the world.

Data is More Profitable Than Ever Before

Another factor driving the monetization of IT is how quickly the cost of storing and processing data in the cloud is falling. Cloud Service Providers like Amazon are able to offer infinitely scaling storage at reasonable prices, compared to the older approach of having data centers on-premise. Enterprises are saving millions of dollars per year by moving to the cloud and gaining competitive advantage against enterprises who are still using older on-premise solutions.

The combination of lower prices, greater agility, and higher revenues through data monetization add up to a huge growth in profit. You can expect to see more and more enterprises to the cloud, especially now that emerging technologies like adaptive data virtualization make the painful parts of replatforming data warehouses to modern, cloud data warehouses obsolete. (By the way, another advantage of cloud storage is that it is also more efficient for IT budgets since it doesn’t need to be tuned or maintained.)

Enterprises are saving millions of dollars per year by moving to the cloud and gaining competitive advantage against businesses who are still using older on-premise solutions. Click To Tweet

The New Data Economy

Big data and the cloud are changing the way companies do business in an even more fundamental way – since data itself has value. New business models revolving entirely around data are springing up, and many companies are changing their entire business models to incorporate insights gleaned from data. Data marketplaces—companies that consolidate huge amounts of data and sell them to enterprises—only started to appear a few years ago, but are already seeing huge traction (especially now that AI, machine learning, and the blockchain are in the spotlight). The best way to grow the bottom line for these enterprises is to increase their arsenal of data, and store/process it at the lowest possible price.

The advent of big data has changed the way enterprises do business forever, and more innovation is sure to come. If you consider the speed and velocity of cloud adoption since Amazon released AWS in 2002, and imagine where we’ll be in 2020 or 2030, the potential market for data-driven business is absolutely colossal.

Many industries—entertainment, food delivery, retail, and the taxi industry—have already been fundamentally disrupted by the power of data but many more are still on the way to disruption. It’s estimated that self-driving cars could send as much as 25 GB of data to the cloud every hour. Wearable devices, like Apple Watches, send location data, browsing habits, purchase data, and more back to Apple, who (thankfully) keep that data private. But once companies like Apple start selling that kind of data to advertisers, Pandora’s Box will be opened, and the data gold rush will begin.

What do you predict for the future of big data? Let me know in the comments – I’d love to hear your perspective.

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About Mike Waas


Mike Waas founded Datometry with the vision of redefining enterprise data management. In the past, Mike held key engineering positions at Microsoft, Amazon, Greenplum, EMC, and Pivotal. He earned an M.S. in Computer Science from the University of Passau, Germany, and a Ph.D. in Computer Science from the University of Amsterdam, The Netherlands. Mike has co-authored over 35 peer-reviewed publications and has 20+ patents on data management to his name.

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