2 Data-driven innovation: the data economy
Data-driven innovation is central to economic growth in cities. Big data is becoming a ‘core asset in the economy, fostering new industries, processes and products and creating significant competitive advantages’ (OECD, 2015). Data exploitation can create value in many sectors, from optimising business processes through to customer insight and creating social value. Smart grid technologies, for example, generate large volumes of data on energy demand and supply that can be exploited to improve energy efficiency. Mobile applications are a rapidly expanding data-using sector of the economy. According to the European App Economy research report the app economy contributes 794,000 jobs and more than €10 billion in revenue per annum across the EU economy (VisionMobile and Plum Consulting, 2013).
In July 2014 the European Commission outlined a new strategy on big data, supporting and accelerating the transition Towards a Data-driven Economy in Europe (European Commission, 2014a). It believes the data-driven economy will stimulate research and innovation on data while leading to more business opportunities and an increased availability of knowledge and capital, in particular for small and medium-sized enterprises (SMEs), across Europe. An International Data Corporation (IDC) study, Worldwide Big Data Technology and Services, 2012–2015 Forecast, suggests growth in the big-data technology and services market from $3.2 billion in 2010 to $16.9 billion in 2015 (European Commission, 2014b).
Among cities pursuing open data policies key drivers have been economic growth and business innovation. A McKinsey report claims that seven sectors alone (education, transport, consumer products, electricity, oil and gas, healthcare and consumer finance) could generate globally more than $3 trillion a year in additional value as a result of open data. This is already giving rise to hundreds of entrepreneurial businesses as well as helping more established companies (McKinsey & Company, 2013).
Next, you’ll explore city data, how it’s being used to create apps and other services, and the business case for using it.