There are more than 11 billion connected devices that produce an astounding eight zettabytes of data annually –that is 8 billion terabytes each year. These devices know when you are awake, asleep, at home, driving and exercising. They even know who you call, when you cook and where you go out to eat. If this data were centralized and organized, Tim Cook might be right in his views on the loss of privacy and the weaponization of data.
So, what are the implications if you do not manage consumer data correctly? The Cambridge Analytica scandal initially led to a $134 bn drop in Facebook's stock. And Google+'s exposure of half a million users' data contributed in part to the end of the service.
When your company gives a partner a copy of your data files, you're sharing data. Sharing your data broadly empowers your partners to perform analyses, but it also prevents you from implementing controls.
Although Facebook didn't intend for Cambridge Analytica to abuse access to user data, the social network is still very much on the hook for the actions of its partner, as the #DeleteFacebook mov ement has shown. Fortunately, there is a safer alternative to sharing data: Sharing the insights that the data contains.
Raw data is useful because of the insights that can be distilled from it. Sharing insights instead of actual data eliminates the risk that your company ends up in the headlines when a partner misuses the data of your customers.
For example, let's say you're Lowe's and a supplier asks to know whether the advertising it ran with you helped drive sales in the store. There are two ways the request could be handled. The riskier way would be to share individual-level customer purchases and let the supplier determine the answer to the question. The safe way would be to answer the question directly without sharing individual-level data. For instance, you might say that 2% more people bought in the store after seeing the ad, which resulted in $3 million in incremental sales.
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In more general terms, a business providing information has two choices: It can sell the data and hope the buyer handles it responsibly or it can sell aggregate insights into consumer behavior that provide the same information with the following benefits.
More control: When suppliers share insights, they give their partners the tools to succeed while maintaining control over the data. This year has been a tumultuous one in cybersecurity, with massive breaches affecting companies large and small. This trend is not going to go away, and the cost to companies that expose users' data will cost them more than money. According to research from Forrester, consumer trust is in short supply, and sharing data when you don't have to can have dire consequences.
Less risk: When you send data outside of your organization, you're more than doubling the risk that it could be stolen by hackers or misused by a third party that you were wrong to trust. Either way, your company is seen as the one that compromised the data, and it will cost you. The average cost of a breach for small and midsize businesses rose 36% from $88,000 in 2017 to $120,000 in 2018. Over the same period, the average cost for an enterprise business breach increased 24% to $1.23m.
More privacy: While three-quarters of consumers are still willing to share data with brands they trust, they increasingly want to know exactly how it's being used. And governmental officials are starting to move toward holding companies accountable. California passed a law that will go into effect in 2020 that requires businesses to justify sharing data. And in Europe, the General Data Protection Regulation (GDPR) allows consumers to demand more transparency from the businesses they patronize.
Some companies opt for spreadsheets to track data flows and an alarming number of businesses don't track them at all. If you're sharing data with other parties, the first step to securing it is tracking where it goes, who accesses it and why they've been granted access.
Company leaders need to ask themselves whether sharing customer data in each case is essential. Chances are, you could be sharing insights instead and reaping the benefits. All companies need data to function but sharing your first-party data can have hidden costs. Whenever possible, share insights rather than raw data.