We are living in a world which has been significantly transformed by digitalization, with the rate of progress increasing exponentially in the last couple of decades. However, another concept that has also entered our vocabulary and is making an impact within the world of business, despite being a lot more under the radar compared to digitalization, is datafication.
This technological process has been actively used is several industries and, in some cases, has helped to amplify companies’ performance, with the result that its proven successes have attracted more attention to the process. Datfication opens up the prospect of improving all existing business procedures, meaning that those businesses that do not embrace the trend face falling behind their competitors on many fronts.
What is Datafication?
Datafication is the set of tools, processes and technology used to transform an organization into a “data-driven” organization. This is data that can be tracked, monitored, and analyzed. The term was coined by Kenneth Cukier and Victor Mayer-Schöenberger in 2013 to apply to the adjustment of invisible processes into data that businesses can use to their advantage. Different industries have already begun utilizing datafication to help build their sectors and amplify their revenues:
- Supply chains: The concept simplifies the formation of short supply chains, creating micro supply chain business processes condensed through low-cost technologies such as mobile phones.
- Agricultural and food sector: It has helped increase traceability and remove the need for intermediaries in the industrial supply chain.
- Manufacturing: Datafication has improved efficiency with the ability to share key bits of data.
- Real estate: Datafication tools have made it possible for companies to gain in-depth insights into different locations, which in turn provides a better understanding to business leaders on where is the best place to locate their business.
- Finance: Insurance companies use the concept to gain a better understanding of a person’s risk profile and can also update business models. Within the banking world, for example, it is used to work out whether a person has the facilities to pay a loan or a mortgage.
One of most established companies that is taking advantage of datafication is Netflix. The popular American subscription streaming service and production company operates in over 40 nations and has approximately 222 million subscribers worldwide. Previously, Netflix’s operation would be more physical with its core business in mail order-based disc rental (DVD and Blu-ray). The process meant that a subscriber would develop an ordering list of the content desired. However, with the advance of streaming technology, datafication has come into its own. Netflix is now able to gather data based on what the consumer had previously viewed in an effort to project what they will want to view from then on, and suggest titles picked for them, in a commercially advantageous example of personalisation.
How Can You Datafy Your Business?
Datafication holds significant opportunities for business process improvement, making it a practice that is financially well worth the implementation. Here are different ways you can datafy your business.
- Utilize technology within the workplace: Integrate the Internet of Things (IoT) into your business. Maximize the technological growth by putting in place things such as sensors, voice assistants and mobile devices, accessories with the ability to have data extracted from them.
- Use suitable applications: Once you have all the technology employed within the workplace, establish the best software that will generate the data you need for research.
- Create a centralised database: Working with all available data is the only way datafication can perform. As a result, you need a database that can be easily accessed by those within the business.
You will find that the datafication process will apply to every part of your business such as workflow, culture, and governance. The size of the process, which involves collecting data from every aspect of a company’s operation, holds the potential for direct your entire business towards a more positive pathway.
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Beyond a Trend
It is apparent that datafication is no longer just a trend, but is changing the landscape of the business world. The rise in the value of data has made it a must-have process, that businesses must implement to help leaders gain better insight into their own companies, and to develop a clearer vision on how the business matches up against its competition.