Data as a Service (DaaS) Business Models

Data as a Service (Daas) Business Models incorporates best practices in data collection, monitoring, interpretation, and distribution in order leverage opportunities for growth, investment, risk mitigation, alignment, and profit. Daas models function within an ecosystem. What this means is that Data as a Service (Daas) models thrive in business environments where the customer needs, data available, and the unique problem to be solved are matched. Particularly, in business environments where the customer finds the data useful.

Collecting and distributing the wrong data, or drawing conclusions from the data that cannot be leveraged by the customer(s), is no better than having no insight at all.

Effective use of data based insights need a business model that has the competencies to implement, evaluate, and leverage information. Determining what key questions drive value across the business enterprise is essential if the correct data is to be collected. Data about widget-1 will not necessarily help answers about widget-2 and widget-3. Relevance is crucial.

Not all data (or DaaS providers) are equal. As a result the interpretation(s) that result from the evaluation of the data determines the quality of its impact. The business model canvas identifies the key drivers that figure the success, and effectiveness, of a business’ ecosystem. The business’s success is dependent on the alignment between the product/ service offerings and the customer’s needs. Whether this is a virtual or physical offering does not matter if the business is unable to pivot when necessary.

Selecting a Data as a Service (Daas) provider depends on the business’:

  • Industry
  • Area of Expertise
  • Priorities, &
  • Ability to Execute

Not all Daas providers are equal and so it is particularly important to evaluate the model’s:

  • Breadth of Expertise
  • Depth of Knowledge in Key Areas
  • Cost/Benefit of using their Services
  • Industry Leadership
  • Mastery/ Control of their Market Space
  • Ability to Change in Response to Industry Trends, &
  • Ability to Collect, Interpret & Evaluate the Data better than you do
  • Location

The following business model canvas has been populated with questions about a Data as a Service (Daas) business model but can also be used to evaluate a business with physical product offerings.

DaaS business model

Confirming how data can help your business strengthen its competitive advantage is a crucial first step. The next step begins with understanding how all of the pieces in the business model ecosystem connect in order to deliver shared value. Each component of the business model delivers a unique value proposition (not to be confused with the company’s larger value proposition) that must be agreed on. This is more difficult than it sounds, as the following questions regarding a DaaS business model indicates:

Question 1: If your business collects data from external sources and delivers this data to other companies as a service, what is your industry competitive advantage?

Scenario: In this scenario the business data belongs to external entities and the process of collection has few barriers (in some instances, public domain applies). The current technology and processes can be replicated and the analysis can be yielded from freely available sources (free) on the internet.

Question 2: The current value driver is the data and not the technology. How would you create a competitive advantage using public domain (or freely available) data?

Data can be leveraged to improve the performance of any of these areas with additive benefits when all areas are emphasized. Service models can leverage data to improve customer service, logistics, and quality. Similarly, business models that emphasize physical product offerings can leverage data to improve (the same, and) sales, decrease return rates (and errors), and improve efforts to support innovation within a given industry.

Understanding what data is needed, and how to leverage information to create a competitive advantage, has never been easier. Identifying a Data as a Service (Daas) provider that is aligned with your business model is crucial although not always easy. Daas providers that specialize in one area may not adequately understand business needs in other areas. Because Daas Models have a low barrier to enter markets and are often copied placing increasing emphasis on subject matter expertise. The challenge to leadership is to lead the discussion surrounding what data is needed, to answer which questions, and how the insights will be leveraged across the business model?

  • What part of the business model is being supported by the data?
  • What is needed to leverage the insight in this business model area?
  • What if any support is needed by other business model areas?

Having data alone is not sufficient to create a competitive advantage. Having the right data, and working with a DaaS provider that understands your business (and changes when you do) can generate precisely the insights your business needs to pursue the next opportunity.

Is your business working with a Data as a Service provider? If not, how would you select a Daas provider? What business area does that model need to understand to support your success? Share your comments below.

Travis Barker, MPA GCPM

[email protected]

http://innovatevancouver.org

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** Possible answer to the questions above (competitive advantage of a DaaS model):

  • Logistics
  • Relationships
  • Subject Matter Expertise (breadth & depth)
  • Flexibility
  • Marketshare
  • Industry Leadership (standards, etc.)
  • Logistics/ Supply Chain
  • Scalability
  • Branding