Open Data: A 21st Century Asset for Small and Medium Sized Enterprises

The economic and social potential of open data is widely acknowledged. In particular, the business opportunities have received much attention. But for all the excitement, we still know very little about how and under what conditions open data really works.

To broaden our understanding of the use and impact of open data, the GovLab has a variety of initiatives and studies underway. Today, we share publicly our findings on how Small and Medium Sized Enterprises (SMEs) are leveraging open data for a variety of purposes. Our paper “Open Data: A 21st Century Asset for Small and Medium Sized Enterprises” seeks to build a portrait of the lifecycle of open data—how it is collected, stored and used. It outlines some of the most important parameters of an open data business model for SMEs.

The universe of SMEs we analyzed comprised those identified within the GovLab’s Open Data 500 project which contains data on how 500 US businesses are using open data in their day-to-day activities. It represents arguably the first systematic effort to really understand how open data can grow revenues, drive innovation, increase efficiency and create new jobs.

The paper analyzes ten aspects of open data and establishes ten principles for its effective use by SMEs. Taken together, these offer a roadmap for any SME considering greater use or adoption of open data in its business.

Among the key findings included in the paper:

  • SMEs, which often lack access to data or sophisticated analytical tools to process large datasets, are likely to be one of the chief beneficiaries of open data.
  • Government data is the main category of open data being used by SMEs. A number of SMEs are also using open scientific and shared corporate data.
  • Open data is used primarily to serve the Business-to-Business (B2B) markets, followed by the Business-to-Consumer (B2C) markets. A number of the companies studied serve two or three market segments simultaneously.
  • Open data is usually a free resource, but SMEs are monetizing their open-data-driven services to build viable businesses. The most common revenue models include subscription-based services, advertising, fees for products and services, freemium models, licensing fees, lead generation and philanthropic grants.
  • The most significant challenges SMEs face in using open data include those concerning data quality and consistency, insufficient financial and human resources, and issues surrounding privacy.

This is just a sampling of findings and observations. The paper includes a number of additional observations concerning business and revenue models, product development, customer acquisition, and other subjects of relevance to any company considering an open data strategy.

The paper was funded by the Markle Foundation and written to inform the Markle Rework America Initiative.

Read and Comment Key Findings (Medium)

Download the Full Paper here (PDF)

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