Being in the 21st century, we are seeing a massive transformation of the Economy towards digitalization and the major reason is the DATA. Data has emerged as a new currency of the digital economy and if you look around at the current technologies and the rise of the Internet, you’ll get to know why it is so. Whether it is Artificial Intelligence/Machine Learning, building Robots to do various tasks we can think of, or businesses and organizations using Big Data Analytics and Applications to empower their business strategies with better Audience approaches providing them assured profits. All of this is done by storing, manipulating, and providing reports based on the Data being Collected. So no doubt, Data is the new currency of the global economy.
Businesses are dealing with a constantly shifting environment influenced by quick advances in technology in today’s hyper-connected society.
Data As a Currency
Data Currency and Data as a Currency are two different terms with their meanings. Data as Currency refers to the monetary value assigned to data to determine its financial significance to businesses and organizations.
Please note that, if the “Data Currency” is not maintained and kept updated, the value of “data as a currency” will also be less or none.
Eg- A cosmetic brand can only make the right data-driven decisions if they are using the latest data to drive valuable and actionable insights.
The Boom of Big Data Currency
We all have heard the word “Big Data” and its benefits these days. The revolution brought by digitalization has given birth to the Big Data Era. With the growing use of IoT devices, smartphones and the online services provided by these devices provide massive amounts of data every second of every day, also called Big Data in formal terms. With big data, comes its 3 main V’s which are: Velocity, Variety, and Volume.
This data collected from the services we use gives information about our behavior and our interactions with the social platforms providing data related to our likes and dislikes. This information and data thus help businesses with product and market analytics which in turn provides benefits of enhanced digitalization of the economy. The fair volume along with the wide variety of data available today is mind-boggling.
Therefore, Data now is not just a mere collection of numbers and words, but it also represents a goldmine of information waiting to be extracted. By analyzing and interpreting the data collected from various resources, organizations benefit by gaining valuable insights into customer behavior, trends within the market, and operational efficiencies. This knowledge is invaluable for decision-making and strategic planning within businesses
Importance of data-driven decision making
Data-driven decision-making has become a crucial part of businesses and companies these days. This is because the ratio of accuracy of data-driven decisions to decisions made on intuitions or past experiences is very high providing high chances of profits and low risks.
Therefore, the benefits of data-driven decision-making are:
- Increase in efficiency and accountability
The effectiveness of data-driven decision-making will not only increase productivity, but also help the analytics team to provide more accurate development models, and advanced analytical insights, and raise data knowledge within the organization.
“When everybody can see how their individual decisions connect to a strategy, it helps change the way organizations think about accountability in DEI, revenue, and changes in the workforce,” says Paul Rubenstein, CHRO at Visier.
With increased accountability, people at all stages know which teams are doing great and which teams need help and guidance eliminating the chances of having critical problems in the company.
- Ownership at every level
Giving analytics tools to the managers of all levels not only increases transparency and accountability, it also aligns everyone to a single point of truth, while building trust in the data. It also creates a sense of ownership for each individual in the organization, making them more responsible towards the company.
- Transparency
It is known to all that transparency between the teams of the company is the building block of trust within it. “You wouldn’t hold anything back on your finance information. You wouldn’t hold back on your quality information. So don’t hold anything back on your people’s information”, says Mark Smith, Vice President, Workforce Strategy Analytics at Providence.
- Innovation and growth
Data-driven decisions can uncover hidden market opportunities and uncover areas for innovation. By identifying emerging trends and customer demands, businesses can enhance their market strategies and innovate with new and better ideas.
How are IT companies leveraging Data?
“Data is the new currency, and I don’t believe we are truly embracing it and all its possibilities.” – ADEC Innovations CEO at UNEA-2.
Talking about data in terms of the digital economy, it is not just some side product generated by business operations, but it acts as the driving force behind many successful business models. Top MNCs like Amazon, Google, and Meta have topped in the art of leveraging data and its hidden benefits to enhance their offerings and create new revenue streams.
E-commerce-focused organizations like Amazon use data-driven algorithms to provide personalized recommendations on products to customers, leading to enhanced sales and customer satisfaction.
Google’s search engine also uses data to provide users with relevant search results and targeted advertisements.
Must have heard your friends saying, “How come I see the same reels or advertisements I talked about recently?” It is because social media platforms like Meta and Instagram use their data to provide personalized content and advertisements, enhancing user engagement and providing advertisements they are interested in.
Apart from these examples, data-driven business models are expanding into many industries such as medicine, finance, and logistics. For instance, healthcare providers are analyzing patient data to improve treatment outcomes and reduce costs, while financial institutions are using data to detect fraud or online scams in banking or financial institutions and make more informed lending decisions.
Value of data in providing better insights
The data becomes useful and valuable only when its quality is refined and when it is being processed at the right speed providing the right insights at the right time. Every click on the web or every interaction with online platforms and every transaction feeds the digital economy.
There will be no benefit if a huge volume of data is stored but it is not being processed at the right time or processed with delay. To leverage the true potential of data, organizations should invest in data storage, management, refining, and structuring of data so that it can provide better and more accurate analytics.
Data can be found everywhere, and whether talking about small businesses or multinational corporations, both of them are having an easier time getting their hands on it. Those who analyze data do so from multiple sources and tools, and it’s no secret that your data is collected wherever you step online.
Thus to provide a clear summary of data, its analytics, and insights, We can say:
“Data is the collection of facts.” analytics means to organize and examine data using analytical tools, and Insights are discovering patterns in data.
Challenges and Concerns Related To Data
While data holds immense use cases and potential to benefit both the customer and the company, it also raises various ethical and privacy concerns. The concerns regarding the misuse of personal data, data breaches, an increase in the number of scams, and other concerns related to surveillance have raised questions and debates about data privacy and user security.
One of the most important concerns associated with the data being accessed from people’s social media or other platforms is data privacy. Especially talking about the misuse of personal information, such as user’s name, addresses or financial details, and even health records, which are collected and stored by organizations. The misuse or mishandling of the data being collected from various sources can result in privacy concerns, identity theft, or unauthorized access to sensitive information.
Regulations like the European Union’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA) seek to address these issues and give individuals more control over their data.
The Significance of Data Currency in the Digital Economy
Data currency, in essence, pertains to the timeliness and relevance of information. The more current the data, the more it reflects the present state of affairs, making it invaluable to various facets of an economy. Let’s delve into its significance and the challenges it presents.
Importance of Data Currency:
Decision Making: Helps in decision-making at both Micro and Macro levels.
Economic Predictions: For envisioning future economic trajectories and making required adaptations, the currency of data is paramount.
Financial Markets: Real-time information can infuse the blood in the lifeline of various sectors like Banking and the Stock Exchange where continuous and real-time updates are required.
Consumer Behavior: Consumer Behaviour is affected by the information available to them.
Investment Strategies: This can create a better inflow of Investment and increase FDI in various sectors.
Monetary Policies: Accurate and real-time data guides and empowers central banks in crafting sound monetary policies like determining interest rates.
Global Trade: International trade-related decisions are also impacted based upon the updated data and hence increase global trade.
Emergency Management: In crises, either economic or natural, immediate and accurate data aids governments and disaster management entities to strategize responses efficiently.
Governance: Transparent governance becomes possible when the public can access and evaluate current economic data. This empowers citizens to keep their governments in check and make effective use of the Right to Information as well.
Innovative Ventures: For businesses, the latest data can sharpen RD efforts, catalyzing economic growth through innovation.
Welfare Initiatives: The Real-time data draws a real picture for the implementation of social welfare schemes of government more efficiently and assessment
Challenges Posed by Data Currency
1. Infrastructure: A seamless flow of information requires a robust infrastructure, which often comes with a high price tag. Hence demand a hefty investment.
2. Privacy: With data of various nature, economic, personal, security, etc. concerns about misuse and data privacy always follows.
3. Short-Termism: A hyperfocus on real-time data can skew decision-making towards immediate concerns, potentially sidelining long-term planning.
In the intricate web of modern economies, data currency stands out as a linchpin. Ensuring its accuracy and timeliness can significantly influence a nation’s economic vitality, while also dictating its agility in addressing both opportunities and challenges.
Conclusion
Data is not just a trend but is now treated as a fundamental aspect of modern business and governance. It empowers organizations to make more accurate, objective, and strategic choices, leading to improved performance, lower risks, and overall success.
Since data has become the new digital currency, it has driven innovation, enhanced economic growth, and societal progress. Organizations that are exploring the power of data analytics are gaining an extra edge in the market. But, they must also take responsibility for the ethical use of users’ data by respecting data privacy and security concerns.
Thus, while data-driven decision-making offers numerous benefits, ethical and privacy concerns should not be underestimated. Organizations, government agencies, and individuals need to address these concerns responsibly. With the correct use of data, we can boost the digital economy by unlocking the full potential that the data holds within.
