A century ago, oil was in high demand and the topic of every business discussion. Today, data is the oil of the digital era, and titans (e.g., Amazon, Google, Uber etc.) of this digital era are showing other companies how to create value from data—including and new business models.
However, not everyone has the volume and variety of data like the titans do. So, how can other companies leverage their ecosystem of customers and partners to share data to create new value?
Enterprise data is a strategic resource for business growth and economic progress. The new digital business models are moving from a closed, linear value chain to an open/permissioned, integrated ecosystem. The key is the ability to exchange data in a secure and privacy preserving manner.
B2B data sharing occurs when two or more businesses agree to share their data or access data from other businesses.
Companies share data with one another in order to improve operational efficiency or to achieve long-term growth. Depending on the business need, data sharing can take several forms, ranging from unilateral to collaborative in the form of data platforms and data marketplaces. In terms of monetization, companies share data for free in order to seek community effort at solving strategic business problems relevant to the company or through the provision of services.
Let’s look at an example of why businesses adopt B2B data sharing.
In the automotive industry, when a manufacturer or NHTSA determines that a vehicle, equipment, car seat, or tire creates an unreasonable safety risk or fails to meet documented safety standards, it issues a recall. But, once a vehicle is out of factory, OEMs don’t have visibility into what is happening with the car. They cannot target the recall by discounting vehicles that have already replaced a defective part at the service center during the previous service visits. This leads to a higher number of recalls than actually required. As measured over the last 10 years, manufacturers bear the average cost of an auto recall at about $500 per vehicle.
A blockchain-based solution can help OEMs with targeted recall which will have an impact on average cost of recall. Recall is not limited to the automotive.
Global data growth is expected to reach 175 zettabytes by 2025, up from 45 zettabytes in 2019. Increased internet and broadband access, mobile phone use, and social media use are among the factors cited as the drivers of the global data boom.
Organizations are embracing a data-driven culture to avoid falling behind their competitors and to see results. According to Forrester, data-driven businesses grow at a rate of more than 30% per year. However, 80% of data lives outside of the walled garden of enterprises. What can you do about it? How can you get it?
The most significant benefits from data sharing are developing and enriching services, training artificial intelligence (AI), improving customer experience, boosting operational efficiency, and differentiating products and services.
According to the Mckinsey & Company report on the financial services industry, “Economies that embrace data sharing for finance could see GDP gains of between 1 and 5 percent by 2030, with benefits flowing to consumers and financial institutions.”
The analogies (the new oil, the new gold, the new capital) for data abound, but no single analogy captures data’s economic value in a true sense because it is unique. Cambridge University reports, “Data is a non-rival” and “Many people can use the same data at the same time without it being used up.” While negative externalities such as privacy infringement can occur, positive externalities happen when one dataset is combined with others. There are a lot of opportunities with positive externalities.
Let’s explore some use cases for B2B data sharing in the supply chain, financial services settlements, and research collaboration.
Supply and demand is highly unpredictable. In a global economy, the supply chain pendulum swings both ways at a high frequency. Unexpected events because of climate changes, military or political conflicts, and even human error have a direct impact on supply and demand. One-up and one-down visibility is not enough: The OEMs that can proactively and timely adapt during a crisis or in the face of any unforeseen blocker have done better than others who can’t.
OEMs now have to understand the deep physics of their supply chain network and how all pieces fit together. However, to understand all the pieces and how they are operating in real time, data sharing needs to happen between partners. All partners, not just one- up and one-down.
The financial services industry could be the biggest beneficiary of B2B data sharing technology, especially real-time, multi-party data sharing. Financial services is a heavy regulated industry, and there are several processes that are repetitive, For instance, when a customer moves between different banking consortium partners, the bank has to onboard the same customer already in consortium with other banks again. It is inefficient. But, with real-time, multi-party B2B data sharing, the Know Your Customer (KYC) process could be automated and trusted as accurate: If a customer X has completed KYC with Bank A, Bank B can use the same information when customer X approaches Bank B. This will create operational efficiencies, and improve customer experience as well.
In November 2019, the United Kingdom National Institute for Health Data Science (HDRUK) launched, a health data research hub which gathers NHS organizations, academics and pharma, tech and medtech industry. The hub aims to collect real world health data to allow researchers to conduct studies to improve clinical practices and, in particular, develop personalized care for patients with chronic diseases, such as Type-2 diabetes or heart failure.
Similarly, as Human API reports, AAA Life Insurance plans to use EHR data to power innovation across their entire business, from automated rules engine to policyholder engagement. EHR platforms enable life insurers to access applicant health data instantly—with applicant permission—via application programming interaface (API) connections from healthcare providers. Insurers can use EHR data to augment their own internal datasets and, ultimately, enhance the speed and quality of the underwriting process.
The benefits of B2B data sharing can be quantified. For example, in India, the use of the national digital identification system, Aadhaar, for KYC verification for retail consumers reportedly reduced costs for financial institutions from about $5 per customer to approximately $0.70.
Another example comes from Estonia, where a study found that X-Road, the internet-based data exchange layer of the country, serviced queries across a variety of applications of open data. In 2014, B2B data sharing yielded 2.8 million hours of time saved; that time is comparable to 3,225 full-time-equivalent employees working for one whole year.
Despite the proven benefits of data-driven decision making and positive externalities of combining data across organizations, few companies share data outside of their organizational boundaries. The challenges to B2B data sharing include legal, data privacy and interoperability issues, as well as the absence of common standards for B2B data sharing and a lack of scale in IT infrastructure.
For data sharing to work, new models and methods will need new systems and institutions to enable data sharing across organizations. But, technical solutions to socio-economic problems are not enough. Businesses should understand the value of data sharing and learn to trust technology to overcome negative externalities such as privacy infringement.
In the data-driven economy, companies should rethink their data value chain. They should move from data silos and a transactional approach to a new concept of ‘ecosystem’ enabled by B2B data sharing.
The B2B data sharing model used today to exchange information is powered mostly by point-2-point (p2p) interfaces between two systems owned by two separate organizations. For non real-time, companies use electronic data interchange (EDI) and for real time, companies use APIs. In either case, the technology is still p2p. P2p has several disadvantages:.
- Because of NxN complexity, the technology doesn’t scale well as your network grows.
- Beyond NxN complexity, p2p APIs have high availability issues when these APIs have to cascade multiple APIs across an unreliable network to fetch information in real time. Imagine, if one of the APIs, or one of the cloud regions, or a part of the network that APIs use for communication is down. You have to rely on stale information or make a phone call to get the latest information. Compare this with a push-based system where change (wherever it happens as soon as it happens) is propagated to a consumer system. Relative to a pull-based system, push-based systems have a large time window for synchronization. It eliminates the risk of pulling information in real time over an unreliable network.
- When it comes to reconciling data across the systems, how do you know where the most recent and reliable source of information on the asset or customer lives? The state of the customer or state of the asset that lives in different systems has a lifecycle that lives across several companies and systems that are part of the value chain. Centralized systems connected by p2p interfaces won’t help you. You will need a data auto-reconciliation system.
Enterprise blockchain technology, powered by distributed ledger databases, helps to achieve coherent, effective and secure ways of sharing data across business and industry.
To appreciate the role of enterprise blockchain, think of the mess that is transactions: Modern business is a world of siloed repositories for data. The data is still siloed even after leveraging p2p interfaces because they don’t guarantee auto-reconciliation of data from across the network of systems owned by different companies where the lifecycle of data lives. Each organization keeps a separate copy of their data because there is no collective trust. Not only does this place companies at a data security risk, it’s severely wasteful.
Enterprise blockchain technology will not only reconcile your data, it will keep your data in sync across different systems and companies so you don’t have to wonder where to go to get the latest on a customer or asset. Vendia Share will push the change as soon as it happens in an eventually consistent way. The blockchain-based data sharing solution is the core technology that will power your data sharing solution. But, that is not enough.
For an end-to-end solution, you have to do more to integrate blockchain-based data sharing into your environment:
- The B2B data sharing solution will not exist in isolation. It has to sit together with the existing IT landscape that includes cloud, legacy applications, and on-premises. This makes interoperability an important consideration. You don’t want to have another silo in your IT landscape, so you should pick a system with open API interfaces.
- Not all connected parties will need all data from all sources. Your partners will ask for partial views of data and support for targeted data sharing, so you want technology where you won’t have to create a private channel for every pair of parties to exchange data with privacy and control. In order to support complex sharing scenarios, you will need a simple and flexible governance layer.
- Your network will not look the same it is today. It will grow. You will add more partners. Some partners may decide to leave or create their own new network. These are all viable possibilities that will happen sooner than you will anticipate. Pick a technology that simplifies partner management.
IT is hard. Servers, databases, and API are complex affairs to operate. Running a blockchain is 10x harder. Writing a smart contract (business logic) is a new craft. You will have a hard time recruiting the right team that will move the needle for you. Yes, blockchain will allow you to build data sharing solutions that are 10X better. But, it will pull you down into the rabbit hole—if you don’t pick the right abstraction of blockchain for enterprise adoption.
You need to consider all the above factors while picking the right enterprise data sharing solution for your business and partners. Having just one and not other features will not cut it. You need all the above to realize value out of data sharing in a timely and cost-effective manner.
Vendia Share blockchain allows you to bring your data model and set up a common schema for data sharing between partners. Vendia Share automatically generates API (GraphQL-based) for CRUD operations, admin operations, and for smart contract configuration and execution.
- You can program creation, configuration, and data operations using GraphQL APIs. The API approach makes Vendia highly interoperable
- The Vendia Share Universal Application is easy to integrate with other cloud-based applications and workflows. You have all the tools built into it. You can leverage the full spectrum of cloud services to do more with your data in Vendia Share.
- Vendia Access Control Lists (ACLs) provide a strong governance and control layer for data sharing for both multicast and targeted sharing. You don’t have to create a private channel for targeted sharing. You simply annotate permissions at the record and field level to share with control.
- The partner management in Vendia Share is extremely simplified. In just one click, you can provide a partner’s email address and initiate a request to join the network. The partner will register on the Vendia Share portal and accept the invitation. Once the invite is accepted, you are assigned a node to share and receive transactions and execute smart contracts locally through node. Partners also have the option to remove them from the network and archive the data they have so far received and shared.
- The Vendia Share experience is close to the SaaS platform. Infrastructure is completely invisible and developers interact with Vendia APIs to perform data operations.
Vendia brings to market an enhanced blockchain platform that is easy to use, easy to build, and doesn’t have any operational burden. Vendia provides an accelerated path from concept to value using data sharing enabled by blockchain technology.
The data ecosystem worked on today will drive innovation tomorrow. If your organization is ready to start working on (or updating) the building blocks of your data ecosystem, contact us and we’ll field your questions to help you find the right solution for your real-time, multi-party B2B data sharing needs.