How should the government approach the big data challenge? Realising economic opportunities and building an enterprising state

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1 February 2013 Hw shuld the gvernment apprach the big data challenge? Realising ecnmic pprtunities and building an enterprising state Snia Susa

2 The Big Innvatin Centre is an initiative f The Wrk Fundatin and Lancaster University. Launched in September 2011, it brings tgether a range f cmpanies, trusts, universities and public bdies t research and prpse practical refrms with the ambitin f making the UK a glbal pen innvatin hub as part f the urgent task f rebalancing and grwing the UK ecnmy, and with the visin f building a wrld-class innvatin and investment ecsystem by Fr further details, please visit Hw shuld the gvernment apprach the big data challenge? 2

3 Executive summary This paper is a cntributin prepared by the Big Innvatin Centre t the Shakespeare Review, an independent review cmmissined by the Data Strategy Bard fr the Department fr Business, Innvatin & Skills. The vlume and detail f infrmatin captured by gvernments and cmpanies, the rise f multimedia, scial media, and the internet f things 1 are all fuelling an expnential grwth in the amunt f data available. Much f this is unstructured, real-time data, bth quantitative and qualitative, that des nt fit int traditinal, structured, relatinal data warehuses. Much f this data, bth structured and unstructured, is generated and captured by public rganisatins and is paid fr by public funds. Opening up these massive and mixed public datasets is a crucial cnditin fr unlcking the ecnmic ptential f big data. Hwever, fr the UK t succeed in securing the ecnmic benefits f these vast amunts f data, several ther plicy issues need t be addressed. What can plicymakers d t make sure that the UK ecnmy takes full advantage f these publicly funded vast amunts f data? Hw can we unlck the value f private data thrugh actin n public data? What wuld deliver prtcls that wuld enable the greatest explitatin f these vast quantities f data, bth public and private? These are the questins addressed in this paper. What the gvernment must d the big data plicy agenda fr an enterprising state In answering these questins this paper identified the fllwing set f actins the gvernment must take t address the big data challenges: 1. The gvernment must aim at making the UK a glbal leader in custm-made big data analysis, a new and fast-grwing categry f prfessinal and business services (PBS). This means that the gvernment must create the cnditins fr the UK ecnmy t capitalise n three f its imprtant cmpetitive advantages: Glbal leadership in ther PBS services such as, fr example, financial and insurance services; Wrld-class universities; Ability t attract and retain talented and innvative peple. 2. The gvernment must pen up data, particularly publicly funded data where the UK 1 By the internet f things the Big Innvatin Centre means the ability f devices and machines t cmmunicate with ne anther withut human guidance. Hw shuld the gvernment apprach the big data challenge? 3

4 has a wrldwide cmpetitive advantage the UK has sme f the best datasets in, fr example, health, demgraphics, agriculture and meterlgy. 3. The UK gvernment must create the digital netwrk infrastructures needed fr the cllectin, strage, integratin and use f large and cmplex sets f data. This includes: Investing in bradband capacity, 4G wireless netwrks and data strage capacity; Crdinating the electrmagnetic spectrum and ensuring hardware and sftware cmpatibility; Ensuring that digital netwrks are safe and secure. 4. The UK gvernment must adjust the educatin plicy and wrk tgether with schls, universities, and emplyers t deliver the next-generatin data scientists and data analysts, as well as data-savvy mid-level prfessinals able t interpret and use the results f data analysis. 5. The UK gvernment must put in place a legal and regulatry framewrk that creates the right incentives fr the UK ecnmy t extract the ecnmic ptential f big data. This requires: Delivering standards n data quality and release frmats; Delivering technical and security prtcls fr using, sharing and cmbining private and public data while addressing privacy and security cncerns; Supprting big data test beds as a bttm-up strategy t determine the set f meaningful and feasible quality standards and technical and security prtcls. Hw shuld the gvernment apprach the big data challenge? 4

5 1. What we mean by big data Frm a technlgical pint f view, big data means a cllectin f large, cmplex, and diverse sets f data. Because f its size and diversity, big data is difficult t wrk with using traditinal databases, statistics, and visualisatin sftware tls. Therefre, frm a technlgical perspective, big data pses three majr challenges: (1) hw t cllect these vast and diversified quantities f data, (2) hw t stre them and (3) hw t integrate them, whenever meaningful. Frm an ecnmic pint f view, the knwledge extracted frm big data is in itself an ecnmic asset; a factr f prductin alngside labur, capital, and technlgy. Making use f vast quantities f data pens up enrmus ecnmic pprtunities ranging frm smthing the way we d ld things t creating cmpletely new prducts, services and rganisatinal methds. Because the knwledge that cmes ut frm big data impacts nearly every part f the ecnmy, we at the Big Innvatin Centre describe it as a new general purpse technlgy. Thus, frm an ecnmic perspective, the three main big challenges psed by big data are: (1) hw t analyse these vast and quite ften unstructured quantities f data, bth quantitative and qualitative, (2) hw t interpret the analysis results, extracting knwledge frm them and (3) hw t turn this knwledge int value added. At the Big Innvatin Centre we are cncerned primarily with the ecnmic definitin f big data, and nt as much with its technlgical definitin. The Big Innvatin Centre fcuses mainly n hw t make the mst f big data, bth private and public, while creating ecnmic grwth and jbs in the prcess. Hw shuld the gvernment apprach the big data challenge? 5

6 2. Ecnmic pprtunities f big data: Why big data is imprtant fr the UK ecnmy Bradly speaking, the ecnmic pprtunities brught abut by big data can be gruped in three main categries: new business niches, prductivity gains and innvatin. New business niches Big data pens several data-related business niches. One is the next-generatin data warehuse tls. The amunts f data that we are generating tday are s vast that it is physically impssible t stre it all. Fr example, accrding t sme estimates 2 healthcare prviders discard abut 90 percent f the data they generate. A secnd data-related business niche is the next-generatin data analysis and visualisatin tls, able t analyse large amunts f structured and unstructured data, bth quantitative and qualitative. A third imprtant business niche is the custm-made data analysis and data interpretatin industry. Capturing the value f data requires the right skills mix, which invlves highly specialised analytical skills but als mid-level data interpretatin capacities. Althugh many cmpanies and rganisatins will develp in-huse analytical and interpretatin capacity, many thers will prefer t lk utside fr specialised and custm-made data analysis and interpretatin services. Given that the highly transfrmative pwer f big data spans all industries and ecnmic sectrs, custm-made data analysis and interpretatin services will sn becme a new and imprtant categry f prfessinal business services (PBS). The UK must aim at being a glbal leader in this new and grwing industry by capitalising n sme f its imprtant cmpetitive advantages, especially: Its glbal leadership in ther PBS 3, e.g. financial services; Its ability t attract and retain talented and innvative peple. Hwever, t becme a wrld leader in this industry the UK must address several majr datarelated challenges. These challenges are discussed in the last sectin f this paper. 2 See McKinsey Glbal Institute (June 2011) Big data: The next frntier fr innvatin, prductivity and cmpetitin. 3 Fr a discussin n the rle f prfessinal and business services in the UK ecnmy, see Department fr Business Innvatin & Skills (March 2010) Prfessinal and Business Services: A 2020 Visin fr Grwth, available at https://www.gv.uk/gvernment/uplads/system/uplads/attachment_data/file/15696/prfessinalbusiness-services-2020-visin-fr-grwth.pdf Hw shuld the gvernment apprach the big data challenge? 6

7 Prductivity gains Anther way thrugh which big data causes ecnmic grwth is by raising prductivity. This can happen in several ways. Here we mentin nly three: First, the knwledge extracted frm big data helps leaders make better fact-based decisins and minimise risks, which ultimately imprves the rganisatin s verall perfrmance and thereby its verall prductivity; Secnd, big data allws rganisatins t add mre value t its prducts and services by, fr example, better segmenting and targeting cnsumers, r by adjusting prices mre quickly in respnse t market changes; Third, rganisatins able t apply insights frm data are mre agile in allcating and redeplying resurces t capture, fr example, first-mver advantages in specific markets. Innvatin Big data als creates imprtant innvatin pprtunities in at least tw ways: First, big data enables rganisatins, bth cmpanies and public sectr, t spt latent market needs. This means that: UK cmpanies must build n these pprtunities and develp new prducts and services, the enhancement f existing nes, and the inventin f new business mdels; The UK gvernment must find new frms f public service delivery t meet these needs. Secnd, the access t new r previusly prprietary datasets, public and private, pens up new innvatin avenues. Fr instance: Pharmaceutical cmpanies might be able t develp disruptive new drugs by gaining access t the patterns f behaviur shwed by the internet brwsing recrds f persns with specific health cnditins; Gaining access t the individual-level medical recrds frm the Natinal Health Service (NHS), while securing identity prtectin, will mst likely prmpt new waves f innvatin in the way healthcare is prvided; Access t the NHS data can supprt the develpment f healthcare-related persnal mnitring services; Using technlgies assciated with the internet f things, healthcare prviders can develp healthcare infrmatin technlgy services t mnitr chrnically ill patients in their hme envirnment. The analysis f the resulting data can be used t mnitr behaviur-prescriptin adherence (determining if patients are actually ding what was prescribed) as well as t develp imprved drugs and Hw shuld the gvernment apprach the big data challenge? 7

8 treatments. These are just a few examples. As David Willetts pints ut in his recent reprt 4, big data is ne f the UK s eight great technlgies and part f this is because the UK has sme f the wrld's best and mst cmplete public datasets in healthcare, demgraphics, agriculture and envirnment. What the UK needs nw is t find ways f explring the ptential f this public data t develp new marketable prducts, services and rganisatinal methds, thereby prmting ecnmic grwth and jb creatin. Fr that the UK gvernment must: Open up public data, particularly publicly funded data. Clearly, the ecnmic ptential f these and ther imprtant public datasets can nly be fully explited if the mst innvative and creative entrepreneurs have full access t data; Find creative ways f tackling privacy, security, and intellectual prperty cncerns while allwing the explitatin f the full ecnmic ptential f big data. 4 Willetts, D. (January 2013) Eight Great Technlgies, Plicy Exchange. Hw shuld the gvernment apprach the big data challenge? 8

9 3. The enterprising state A fcus n pen data in islatin might result in missed pprtunities. Opening up public data is a crucial first step. Hwever, plicymakers must, at the same time, address several ther challenges if they want t create the right cnditins fr the UK ecnmy t capture the full ptential f big data. Fur particular issues stand ut fr the gvernment t fcus n. First, the enterprising state must ensure that the right digital infrastructure is in place. Building effective and reliable digital netwrks is a precnditin fr making full use f big data. This includes: Securing investment in bradband capacity, 4G wireless netwrks and in data strage capacity; Ensuring cmpatibility amng parts f the infrastructure netwrk, which requires crdinating the electrmagnetic spectrum, ensuring hardware and sftware are cmpatible; Making netwrks safe and secure. There is an pprtunity t integrate the necessary investment in digital infrastructure in the ambitius UK gvernment s Natinal Infrastructure Plan, first annunced by the British Prime Minister David Camern in 2011 and mved up the agenda in Secnd, the enterprising state must tackle the ptential skills mismatch. Making the mst f big data calls fr a labur frce able t analyse, interpret and put the insights extracted frm data t wrk. The UK educatin plicy must make the necessary adjustments t deliver: The next generatin f data scientists and data analysts; Data-savvy mid-level prfessinals able t interpret and make meaningful use f the data analysis results. A failure t adapt t these skill requirements will limit the UK s ability t capture the full ptential f big data. It can als raise structural unemplyment in the UK. This presents a significant challenge t the gvernment, but als t schls, universities, and emplyers. Third, the enterprising state must put in place a legal and regulatry framewrk fr data. This framewrk must address tw quite ften cnflicting bjectives: Ensuring that cmpanies have the right incentives t fully explit the ptential f big data; Hw shuld the gvernment apprach the big data challenge? 9

10 Prviding the necessary safeguards t address privacy, safety, and intellectual prperty rights cncerns abut big data. There is currently little clarity abut the rules and prcedures cncerning access t public data as well as regarding sharing data amng cmpanies. There is als a degree f uncertainty abut whether such rules will change in the future. This cnfusin and uncertainty make it harder fr cmpanies, particularly smaller cmpanies, t make valuable use f big data. The enterprising state must prvide a clear, stable and cnsensual framewrk fr using and prtecting data. This is accmplished by: Delivering standards n data quality and release frmats; Delivering technical and security prtcls fr using, sharing and cmbining private and public data. This includes delivering prtcls in terms f, fr example, data annymisatin and level f data aggregatin. These standards and prtcls must set the rules and prcedures that allw cmbining public and private data in ways that prtect privacy, security and intellectual prperty rights while ensuring access t as much f the infrmatin encmpassed in big data as pssible. Furth, the enterprising state must supprt big data test beds. Develping meaningful quality standards and technical and security prtcls is nt a straightfrward task, t say nthing abut re-shaping the whle legal and regulatry framewrk fr data. An effective apprach is t learn frm practical experiments with data. Big data test beds are special spaces where cmpanies, entrepreneurs, academics and public rganisatins can share and experiment with public and private data in a secure envirnment, withut fear f lsing cmmercial advantage r breaking the law. Big data test beds are meant t: Emphasise bth the pprtunities and barriers resulting frm sharing and cmbining data frm public and private surces; Shed light n hw the UK shuld change its data rules and regulatins in rder t make the mst f sharing and cmbining private and public data while prtecting the privacy f citizens and prviding data security. In additin t sme gvernment supprt, putting big data test beds in place requires a trusted brker t hst them. The Big Innvatin Centre, by bringing tgether cmpanies, universities, and public agencies is well psitined t play this rle. Hw shuld the gvernment apprach the big data challenge? 10

11 Acknwledgements This reprt is a publicatin frm the Big Innvatin Centre, an initiative frm The Wrk Fundatin and Lancaster University. The cntent f this reprt reflects the pinins f its authrs and nt necessarily the views f the Big Innvatin Centre r its supprters. The Big Innvatin Centre is supprted by the fllwing cmpanies, public bdies, universities and private trusts. Hw shuld the gvernment apprach the big data challenge? 11

12 Cntact details Big Innvatin Centre The Wrk Fundatin 21 Palmer Street Lndn SW1H 0AD All rights reserved Big Innvatin Centre (The Wrk Fundatin and Lancaster University). N part f this publicatin may be reprduced, stred in a retrieval system r transmitted, in any frm withut prir written permissin f the publishers. Fr mre infrmatin cntact The Wrk Fundatin Alliance Limited, 21 Palmer Street, Lndn, SW1H 0AD, UK. Registered Charity N Registered as a cmpany limited by guarantee N Registered address: Lancaster University, Bailrigg, Lancaster LA1 4YW, UK. Hw shuld the gvernment apprach the big data challenge? 12

13 Hw shuld the gvernment apprach the big data challenge? 13

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