TDWI Upside - Where Data Means Business

Putting IT in CapITalism

Legally correct and ethical behavior is demanded of finance, marketing, and sales. Why should IT be different?

Many of us have heard -- and even used -- the phrase "data is the new oil." Perhaps surprisingly, its first known use predates the widespread adoption of big data. Clive Humby, architect of UK retailer Tesco's loyalty Clubcard, apparently coined the phrase in 2006.

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The phrase is mostly used loosely in marketing by the IT industry and by aspiring politicians who want to sound knowledgeable about the digital economy. It has also attracted some criticism. In January 2018, the World Economic Forum provided a list of ways in which data and oil are dissimilar, suggesting that the only thing they have in common is that they both can generate value. Major differences included the fact that oil is (very) finite but data is not; oil is scarce, data is anything but; oil is a single-use resource, but data can be reused and shared at little additional cost.

Digital Platforms Embody the Future of Capitalism

Why, then, do I reuse what is possibly a somewhat jaded analogy? I return to it because Nick Srnicek, a lecturer in digital economy at King's College, London, has offered another interesting parallel between data and oil in his 2016 book Platform Capitalism. He argues that just as oil was the primary new raw material that capitalism appropriated in the 20th century, data fulfils that role today. How such appropriation is happening for data and, indeed, why it differs from how oil and earlier novel raw materials such as cotton and steel were appropriated are central ideas for understanding how business in the 21st century works.

Writing from a completely different angle than IT, Srnicek -- a political philosopher -- addresses what we would call digital business by attempting to answer how it adheres to the principles of capitalism and, therefore, how it might fail or succeed.

He identifies digital platforms as the foundations of data-driven business and lists five different types:

  • Advertising platforms, such as Google and Facebook, appropriate social and activity data as a raw material that is refined and valorized through the sale of advertising space and knowledge

  • Cloud platforms, the most successful of which in the West is Amazon Web Services, rent utility-type services (such as data storage, analytics, and AI) to any business, building the basic infrastructure of the digital economy but also becoming the intermediary for vast troves of valuable data about customers

  • Industrial platforms, as offered by General Electric and Siemens, for example, build the equivalent basic digital infrastructure for manufacturing, distribution, and related services based on the data gathered in industrial processes as the raw material

  • Product platforms, such as Spotify and Zipcar, are built in order to sell, deliver, and service a particular product and use the data collected as the raw material to tie in customers and improve the product

  • Lean platforms, the prime examples being Uber and Airbnb, are a subset of product platforms where the owners of the platform own few if any of the assets they offer and operate in a hyper-outsourced model, focusing their attention on the data and platform

Srnicek's analysis of the future outlook for each of these platform types against the principles and practices of the capitalist economic model makes for disturbing reading for those of us interested in preserving privacy, net neutrality, and an open Internet.

Platforms increasingly exhibit typical monopoly behaviors, including aggressive acquisition of competitors and startups. Of particular concern is their segmentation and privatization of swathes of today's shared, common Internet through pricing, security, and technical means. The results are seen, for example, in the demise of net neutrality, the growth of national firewalls, and in the concentration of multiple services under fewer brands. This direction is known as "enclosure of the Internet," harking back to the enclosure of the commons in mediaeval Europe and by the robber barons of 19th century America, when the lands of the poor or indigenous people were widely expropriated. The result today, as in the past, is an extreme concentration of wealth in the hands of a small and privileged few.

The Platform as the Responsibility of IT

Despite the society-wide scope of this potential future driven by platform capitalism, it is worth noting that its foundations are all firmly in the hands of IT within business and government. Data, the fundamental raw material, is gathered or created, managed, and given meaning only through the efforts of IT. Similarly, the vital engines of these platforms -- analytics and eventually artificial intelligence -- can only operate through the systems and tools provided by IT. Only IT has the knowledge and power necessary to build and operate these platforms.

It is, therefore, incumbent on the IT profession to step outside the data center and contribute in a deeper and more systemic manner to defining the underlying business drivers of these platforms and embedding checks and balances against the most extreme tendencies in their design. Google employees have already shown courage in campaigning against the company's participation in an AI project for the U.S. Department of Defense as well as its plans to re-enter the tightly controlled Chinese Internet space.

Although some IT traditionalists may decry such actions as political or partisan, they reflect the reality of IT's central role today. As IT has moved from a back-office support function for internal data to a key role as the data and analytics engine of business development and success, IT professionals are best positioned to understand the impact of their actions.

Similar firm stands on privacy concerns and ethical issues will be required, not just by concerned individual employees but by businesses in the IT industry. Apple CEO, Tim Cook's recent call for federal legislation to prevent widespread "weaponizing" of personally identifiable information (PII) shows leadership, although Apple's business model, which has a much lesser dependence on advertising -- and thus collection of PII -- than its competitors, makes it easier to take such a position.

IT departments, as the business functions responsible for the design and operation of the digital business, must also show leadership in ethical design and morally defensible implementation. Legally correct and ethical behavior is demanded of finance, marketing, and sales. Why should IT be different?

To suggest -- as is often done -- that such considerations are beyond our training or skills is disingenuous. The designs and uses of digital platforms are so novel and all-encompassing as to be beyond the experience of almost everybody involved. At least we in IT have the experience of years of data management to evaluate the implications of the extensive use and reuse of data and analytics at the core of these platforms.

In the emerging economy with digital platforms at its foundation, the time has come to put IT at the soul of capITalism.

About the Author

Dr. Barry Devlin defined the first data warehouse architecture in 1985 and is among the world’s foremost authorities on BI, big data, and beyond. His 2013 book, Business unIntelligence, offers a new architecture for modern information use and management.


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