The Jan. 18, 2014, edition of The Economist featured “A Cambrian Moment,” a special report on tech start-ups. The report discusses how the digital marketplace is experiencing a Cambrian explosion of products and services brought to market by an ever-increasing plethora of new start-ups. Precipitating this explosion is the modern “digital platform” – an assembly of basic building blocks of open-source software, cloud computing, and social networks that is revolutionizing the IT industry. This digital platform has enabled technology start-ups to rapidly design and bring to market a raft of new products and services.
A similar evolution is taking form in the world of data. Anabelle Gawker, a researcher at Imperial College Business School, has argued that “platforms” are a common feature of highly evolved complex systems, whether economic or biological. The emergence of such platforms is the ultimate result of evolving exogenous conditions that force a recombination and rearrangement of the building blocks of such systems. In the data world, this rearrangement is taking place thanks to the falling cost of information processing, the standardization of data formats, and maturation of large-scale connectivity protocols. The emergence of such data platforms has significant implications for a range of industries, not the least of which are data-intensive industries like healthcare and financial services. Like the digital platform, the data platform will give rise to an explosion of data-enabled services and products.
Early evidence already can be seen in the pharmaceutical and drug manufacturing industries. Drug manufacturers need thousands of patients with certain disease states for late-stage clinical trials of drugs under development. This patient recruitment process can take years. The Wall Street Journal reported that to speed up the recruitment process, drug manufacturers have turned to entities such as Blue Chip Marketing Worldwide, a drug-industry contractor that provides data-enabled solutions based on consumer data sets obtained from Experian, a data broker and provider of consumer data. Blue Chip uses sophisticated big data analyses and algorithms to identify individuals with potential disease states. Blue Chip’s services have already enabled a drug manufacturer to cut patient recruitment time from years to months.
Trading is another industry where early indications of such movements can be seen. Also reported in The Wall Street Journal, in their never-ending quest to gather market-moving information quicker, traders have turned to outfits such as Genscape, a player in the growing industry that employs sophisticated surveillance and data-crunching technology to supply traders with nonpublic information about topics including oil supplies, electric-power production, retail traffic, and crop yield. Founded by two former power traders, Genscape crunches vast amounts of sensor data, video camera feeds, and satellite imagery to draw patterns and make predictions on potential movements in supply and demand of commodities such as oil and electricity.
We are in the early days of this evolutionary process. The evolution of the data platform will most likely mirror the evolution of the digital platform, although it is expected to proceed at a faster pace. As competing technologies and solutions evolve and mature, we will see consolidation and emergence of just a few data platforms that will benefit from the tremendous horizontal economies of scale. Information industry incumbents such as Google will be in the pole position to be leaders in the data platform space. For example, Google already has a massive base of web and social interaction data thanks to Google Search, Android, and Google Maps, and it is making aggressive moves to expand into the “Internet of things,” the next frontier of big data.
Concurrently, we will witness a broad emergence of a long tail of small vendors of industry-oriented data products and services. Blue Chip and Genscape are first movers in a nascent market. As the economics of harvesting and using data become more attractive, an increasing number of industry players will want to leverage third-party data services, which in turn will create opportunities for data entrepreneurs. The Cambrian explosion will then be complete and the start-up garden of the data world will be in full bloom.