Data Monetization: Energy Edition

“Data is the new oil” declared Clive Humby in 2006

Many have run with this now clichéd statement while losing sight of what Humby really meant. The value of data, like oil, only lies in its refinement.
–     Analysis
–     Extraction of meaning
–     Uncovering insight
–     Bringing shared understanding
–     To drive profits 💰

And this last bullet is what data monetization is about.

According to Gartner, Data Monetization refers to the process of using data to obtain quantifiable economic benefit.

There are two basic ways to monetize data:
1.    Data as a service (selling/sharing data under mutually acceptable commercial terms)
2.    Use data to improve performance, reduce costs and drive-up profits.

Kevin Lobo and Josh Goldner have an article that breaks this down. Vin Vashishta has a book coming out in July that’ll take this head on as well.

The oil and gas industry generates massive amounts of data. According to IBM, 80,000 sensors generate 2 TB daily on the average oil platform.

However, there is also the financial and commercial data that underpin daily global energy transactions. It is this data that analytics firms and data reporting agencies collect and monetize using the “data as a service” business model.

It is widely known that oil prices drive the profitability of businesses interacting with it. The business model which offers data as a service is shielded against this volatility.

The charts below illustrate this: While the volatility of oil price can be seen between 2005 and 2019, revenue earned by businesses that offer data services to the oil industry steadily increased.

S&P revenue increased from $3.7 bn (2010) to $7 bn (2019), while IHS Markit revenues reached $4.4 bn (2019) compared to $1.11 bn four years before.

This revenue trend benefits from the diverse portfolio of industries, markets, and the commercial fee structure these players adopt.

Leave me a comment below with your thoughts!

Credit to Analytics8 | Data & Analytics Consultancy for the data monetization paths.