Text: Pasi Ropponen
The cities in the Helsinki Region have worked actively for several years to make their data open and accessible to everyone. Open data increases people’s knowledge and understanding and improves their possibilities for active participation in society. At the same time, the expectation is that open data creates possibilities for both startups and established companies to innovate and create new business.
While the idea that open data enables new business is generally well accepted, we still have quite limited understanding of how that works in practice. Therefore, Helsinki Business Hub and Forum Virium Helsinki recently carried out a study on how Finnish companies have been able to use open data for business purposes.
The study covered about 100 companies that were known to utilise open data in their activities. The results were very encouraging: nearly half of the reviewed companies were leveraging open data in products or services that had business potential and could be sold on the market.
Open data is a broad concept that includes all kinds of data sources, but our study indicated that certain types were particularly useful for business creation. The most commonly used open data was geographical and location information favoured in both B2C and B2B businesses. Traffic and event information was another frequently used information type primarily utilised in consumer applications. On the B2B side there were also several companies offering either application development or data analytics solutions and services.
The open data alone is obviously not a sellable product, as by definition the data is available to anyone free of charge. However, business can be created by taking the open data as one ingredient of the offering and building something value-adding around it. For most companies the value-adding part was either a service or a digital element such as application or SW development. Many companies were engaged in consulting, where the focus could be, for example, on creation of new solutions through combining open and proprietary commercial data and related service design.
A challenge in open data based business creation is the lack of service level agreement or guarantee that the data is available also in the future in an unchanged format. This creates a business risk both for companies who incorporate open data into their offering and to customers who buy the solution. While this does not seem to be currently a major issue for the companies, it is clear that large R&D investments will not be possible without a guarantee that also the open data is future proof.
Our study on open data business in Finland also tried to understand what kind of export business opportunities the reviewed companies had. Though the vast majority of the companies were purely focused on the domestic market, around 10 per cent seemed to have potential also for export business. A few of them were already operating on export markets, and others had either plans or aspirations to do so in the future. The challenges in expanding to export markets were typical of smaller companies, such as lack of financing and resources.
In order to enter export markets, companies need good public references from the domestic market. This is an area where the Helsinki Region cities can easily offer a helping hand. By piloting and doing public reference implementations with the companies, the cities can help their efforts to make data open result also in better export opportunities for companies.
Pasi Ropponen is a Senior Business Advisor at Helsinki Business Hub with strong business acumen and knowledge of the ins and outs of the Helsinki ICT scene.