Open data could save trillions, but not before the public and private sectors evolve

While slip-ups on Healthcare.gov might cast doubt on federal technology projects, a recent McKinsey Global Institute report makes the case that there is great economic potential in the free exchange of data between government and consumers — trillions of dollars worth.

Simply sharing data between governments, private institutions and consumers could unlock economic potential in areas such as education, transportation and healthcare, the report argues.

Free information sharing — called “open data” — could help consumers spend smarter, but could also help public and private institutions correct operational inefficiencies, such as in manufacturing or scheduling. Combined, these gains could exceed $3 trillion annually, the report estimates.

Almost $100 billion of value could be added in the transportation sector alone, especially in infrastructure planning, fleet management and consumer behavior. For instance, more open data about door-to-door travel time could help municipal transit systems move more people; commuters could reduce time spent waiting for delayed trains. Constant updates about a vehicle’s condition could help fleet managers plan in real-time, resulting in up to $370 billion in value worldwide including global fuel savings and more efficient maintenance, the report found.

Despite the economic opportunity, both the public and private sectors must adjust before such potential can be realized, analysts and advocates say.

The open data movement has federal support, but will need to create regulations for how data can be used, said Tim O’Reilly, founder of O’Reilly Media and board member of Code for America, a public service organization promoting open data.

Data.gov, a site launched in 2009, hosts more than 75,000 data sets free for public use in areas such as hospital fees and climate measurements.

“Taxpayers paid for vast troves of government data—and wherever possible, those data should be accessible to everyone,” U.S. Deputy Chief Technology Officer Nick Sinai said in a statement about the report.

Though O’Reilly noted the federal government has been especially helpful in providing geographic and weather data, applying the open data model to areas such as healthcare could require more complex regulation. Particularly where confidential information could be compromised, regulators must set boundaries for how data can be used, he said — insurers, for instance, shouldn’t be allowed to use the data to discriminate between individual clients.

“I don’t believe preventing access to data is the way to anything in this space. Somebody will always find it...It’s much more a case of where you need affirmative regulation: ‘Here’s what you can do, here’s what you can’t do,’ ”O’Reilly said in an interview.

There are costs to providing and maintaining truly open data, even if the expense of managing and storing the information declines, McKinsey analyst Michael Chui, one of the report’s authors, noted in an interview.

“There are things you need to do — you need to put the processing in place, you need to put the technology in place,” he said, adding that cybersecurity and preserving confidentiality requires extra considerations.

And especially for private companies who feel their data is proprietary, or don’t want to share it with competitors, freely sharing information “can be a mindset challenge.”

To combat these challenges, organizations such as the UK-based Open Data Institute are training public and private sector groups make their data more transparent. On Tuesday, ODI announced it was creating a series of satellite groups around the world to create standards for information sharing, including in the United Arab Emirates, France, and the U.S. The U.S. group is backed by $250,000 from the Knight Foundation.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
Comments
Show Comments
Most Read Business