I came across the analogy when participating in an exciting data related debate (I know I know…but give me a chance to explain) and at first, I thought the answer was an obvious Yes. But as one tends to do after a topical discussion, I began to reflect on my answer. Maybe I had made a rash decision?
Can Data really be called the new oil?
Let’s break this down.
In a book published by Gartner “Leading the IoT” Mark Hung (Gartner Research Vice President) states that by 2020 they expect to see 20 billion internet connected objects such as cars, vending machines and jet engines. If we include general-purpose devices, such as PCs and phones, Cisco’s White Paper, “How the next Evolution of the Internet is changing everything” predicts that there will be more than 50 billion connected devices. The sheer number of connected items will lead to an explosion of data being created, also known as “Big Data”. Putting aside that this will be for an estimated Global population of 8 billion; it’s overwhelming to know that the market opportunity for this could be in the trillions!
I’m assuming by now you can see why the debate was exciting?
Let me go on.
90% of the data in the world has been generated in the last two years (I know!) This is 2.5 quintillion bytes of data at our current pace, but at the rate technology is evolving (notably with the help of IoT) the pace will accelerate even more. The following diagram shows just how much data is being created every minute.
Mind-blown? Me too.
So next time you tweet, swipe, like or share – remember you’re contributing to the world’s bank of data. And it’s always interesting to think how The Four Horsemen of the Tech World (Amazon, Apple, Facebook and Google) will think of innovative ways to use this data to further their market capitalisation (which is currently already in the hundreds of billions).
However, data is dirty and dirty data is no good. Before any analysis or actionable insights can be drawn from it, you need to clean it. The term “Data is the new oil” was coined by Clive Humby in 2006, a British Mathematician, also known as the architect behind Tesco’s Clubcard. The statement was further elaborated by Michael Palmer (Association of National Advertisers):
“Data is just like crude [oil]. It’s valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals etc. to create a valuable entity that drives profitable activity; so must data be broken down, analysed for it to have value”.
So, it’s now that we can start to see the similarities. Data needs processing just as oil needs refining to unlock its value. The 2018 BP Statistical Review of World Energy revealed that in 2017, oil was produced at a rate of 92.6 million barrels per day. In the same year, the top 25 oil and gas companies on Forbes Global 2000 list generated $2.2 trillion (and pocketed $73 billion in profit!) Oil dominates almost every aspect of our lives (fuel for our cars, production of plastic goods, electricity, fertilisers etc.) which is the direction Data is going in (refer to the diagram above if you need to be re-amazed). But any more than that and the analogy starts to crack.
Oil is a finite resource, once used it has no value.
Extracting it is a long and expensive process composed of several activities; pre-drilling (i.e. site surveys and setting up the infrastructure) can take half a year or more to complete, drilling into the earth and then transporting it. Transporting crude oil is a lengthy process which can be exacerbated if countries don’t use pipelines and convoluted if it needs to pass through nations with political problems.
Data is an infinite resource, created simply by being online, transported effortlessly around the world at low costs and stored in the cloud. Although its monetary value is time critical, value can be defined by knowledge too, the more we ‘reuse’ data, the more we learn from it. Machine Learning is a great example of this. Exposing algorithms to data without using a predetermined equation allows it to find natural patterns that contribute to decision making and predictions – this plays an important role in medical diagnosis, stock trading, energy trading and so much more.
The thought of data dominating our lives is becoming easier to see.
The European Parliament saw this too and passed the General Data Protection Regulation (GDPR) act in May 2018 – information in the wrong hands or held by the many creates a power imbalance which can lead to a myriad of problems. Facebook is an example we can all relate to, it has more than two billion active monthly users, all leaving a data trail online. So, when they revealed in September 2018 that tens of millions of Facebook accounts had been compromised, spilling our personal data online – a formal investigation with a potential fine of $1.6 billion highlighted the criticality of a data breach. What’s worrying is that you won’t always see the immediate impact of your stolen data…over time, hackers can sell, publish or use it to become you. An example of just this is the 2016 LinkedIn Hack, to this day, there are still some criminals exploiting the data.
Oil brings a completely different set of problems. Oil spills. In 2010, BP paid $18.7 billion (the largest recorded US environmental fine) for the explosion at the Deepwater Horizon Oil rig in 2010. It cost the lives of 11 people and severe pollution, 4.2 million oil barrels had expelled into the Gulf of Mexico. This month (March 2019) we’ve already seen 75 tonnes of it spill into the Solomon Islands and more than 50 people are missing after an oil pipeline exploded in southern Nigeria.
Data Breaches and Oil Spills are both severe but affect the world and its people in significantly different ways.
I’d say at first glance, comparing Data to Oil can be forgiven, but as we dig a little deeper, it’s clear to see the differences outweigh their similarities. Yes, they’re both powerful and disruptive, but are so in their own ways.
So, let me ask the question again.
Is data the new oil?