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In today's tech-driven world, data is the driving force behind it all. With an expected 463 exabytes of data created every day globally by 2025, businesses are prioritising data at the core of their operations. CEOs are doubling down on data-driven organisations, with a recent survey showing that 83% of them want to do just that. The data economy is built on the premise that while data has no inherent value, its use does.
Still today, the data economy is mainly understood as an exchange of value where users give their data to access digital services, which companies then monetise through advertising. Today businesses are improving and broadening how they manage, analyse, and extract value from their data. This presents a significant opportunity for start-ups to capitalise on by developing hardware and software that can enable such a shift in the enterprise, whilst expanding the definition and market potential of the new data economy.
The growth of the data economy
The potential for growth in the data economy is immense. According to the European Commission, the EU27's data economy was worth €325 billion in 2019, a figure expected to exceed €550 billion by 2025. Moreover, the value of data goes beyond monetising user data through advertising and commerce; it has a widespread impact on various sectors and market segments.
Intelligent automation technology, such as AI, RPA, process mining, and document automation, is being adopted by businesses to streamline processes and optimise customer service. Companies like UiPath are already making significant strides in this area. Similarly, Operations1, a German start-up, has used data analytics to help manufacturers future-proof their operations by providing them with a digitalized and full view of their workflows.
Furthermore, start-ups are exploring new technologies like AI, quantum, and API infrastructures, helping companies to optimise their implementation of these technologies and to build innovative software utilising data better. Start-ups are well-positioned to help companies capitalise on the potential of their data and gain a competitive edge in their markets.
Clarity in the data economy
Building trust is crucial for businesses to fully realise the enormous potential of the data economy, just as it is for consumers when using digital services. With so much data being exchanged and processed, also business-users must be confident that their sensitive information will be handled with the utmost transparency and security. In fact, without complete trust, businesses will be unable to access the large, high-quality data sets essential for many AI models.
Ensuring transparency and clarity is therefore of paramount importance so that different parties can fully understand how the data will be used, stored, and protected before they choose to share it. By establishing trust and building a solid reputation for respecting privacy and security, businesses can unlock the full potential of the data economy and take advantage of the many opportunities that come with it.
There are numerous approaches to address trust and transparency, including a shift towards creating AI that relies on high-quality, accurate data rather than massive datasets. Federated learning is an effective way to achieve this strategy, with algorithms running locally, and only the training results shared centrally. This approach is particularly relevant in industries like banking, healthcare, and education, where data privacy and security are of utmost importance.
How regulators can play an important role
The role of Europe in setting global standards for the functioning of the data economy cannot be overstated. The EU Data Strategy of 2020 recognises the need to strike a balance between the flow and use of data and the preservation of high privacy, security, safety, and ethical standards. Compared to the private sector-first approach in the US and the significant state controls in China, Europe's pragmatic middle ground offers a unique advantage in shaping the future of the data economy.
For start-ups to succeed in this dynamic landscape, they must stay abreast of the continuously evolving regulatory framework and engage with policymakers to ensure that governance aligns with their needs. As a critical voice from the frontlines, start-ups can help regulators understand the challenges they face in driving growth and innovation in the data economy. By collaborating with regulators, start-ups can help shape a regulatory environment that fosters innovation and growth while safeguarding user privacy, security, and ethical standards.
Next steps for start-ups
The new data economy is a defining feature of our tech-driven world, holding the potential to reshape industries and customer interactions. Europe has a unique opportunity to lead the way in this space, leveraging the region's world-class universities, engineering talent, and ambitious regulators to develop cutting-edge software and innovative businesses that define the next generation of the expanding data economy.