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4 Steps Toward Open Data Business Models

techsoup global logoSince we’re in a nascent space when it comes to open data business models, we’ll do as much looking for components and philosophies underlying them as we will for models in action.  A TechSoupGlobal team consisting of Founder, Daniel Ben-Horin, Jessica Galeria, and Keisha Taylor take up that question – the underlying parts – and recommends four sequential steps that should be the foundation of sustainable business models using open data.

By now, ‘open data for the social sector,’ ‘open data for the public sector,’ or ‘open data for hackers’ all roll quasi-easily off the tongue. The concept of ‘open data business models,’ on the other hand, still has many experts in the field scratching their heads.

If the nascent open data movement has not yet proven the case for replicable and profitable open data business models, it’s not for lack of trying. O’Reilly, Enrico Ferro, Jeni Tenison, and Deloitte, among others, go a long way in advancing the discussion, pointing to freemium, open source, cost avoidance, dual licensing models, and such. The Open Data Institute also has a nice comparison of various models, and the government of New Zealand publishes a series of case studies on re-use of their open government dataset.

So do we really have what a World Economic Forum /Bain report calls “a new asset class” in personal data? Perhaps. But we need to listen closely to a recent post on the Harvard Business Review’s Blog Network which admonishes us to Stop Assuming Your Data Will Bring You Riches. The post calls out the importance of understanding the value of the data, to whom, why and how much; in other words, to set realistic revenue expectations.

This ‘understanding the value’ demands a nuanced view of the distinction between ‘Open Data’ and ‘opening data’. How open, really, is data that is technologically accessible but politically or economically closed? Conversely, how closed, really, is data that is ‘owned’ but made freely accessible, through open APIs and other means.

TechSoup Global is interested in harnessing open data and any other accessible data to drive creation of new social benefit products and services and helping bring them to what will surely become a highly nuanced marketplace, with different forms of ROI.

Linking 4 Steps for Success

To realize the full potential of data to create social impact in a sustainable fashion, we believe four steps need to be sequentially linked. While these steps have power separately, it is in the sequencing that real impact—and real business models—can be found. And we believe this is true across \ issue area or industries; e.g. we are currently considering how to apply this model to issues as divergent as Refurbishing in East and Southern Africa , Open Government and anti-Corruption in CEE and the Balkans, and Reduction of Violence in Southern Thailand.This is the sequence we recommend:

  1. The Deep Dive on Data – What is out there that is open? What other data is accessible and at what cost? DataKind has a great model for working with NGO datasets, for example. Engage communities with data scientists. Display the findings accessibly.
  2. The Convening — Bring activists, geeks, business, and (where possible) government together to debate and hack. Here’s a list of hackathons happening around the world now.
  3. The Challenge — Modest incenting of the best solutions. The EU Open Data Challenge is one example; another is TechSoup Global’s own ReStart Romania challenge.
  4. Incubation —Providing the support necessary to get to market. The Open Data Institute incubates projects following a challenge process, and the prestigious Y Combinator has recently opened its start up support programming to nonprofits.

We, or others (some of whom are linked above), have had success with each of these steps separately. Now is the time to combine the steps coherently and sequentially. Whether new tools and services are brought to market through for profit, not for profit, or public sector collaborations, we believe the ‘ business model’ is to form collaborations to implement this sequence with clear goals and KPIs.

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Daniel Ben-Horin founded CompuMentor (now TechSoup Global) in 1987 and guided it as CEO and co-CEO until the end of 2012, when he assumed his current role of Founder and Chief Instigator. He blogs frequently about technology and social justice, primarily for the Stanford Social Innovation Review and Huffington Post

Jessica Galeria is Associate Director of Strategic Development for TechSoup Global. She is a career nonprofiter, with stints in the Bay Area, Washington DC, and Rio de Janeiro, and an MBA from UC Berkeley’s Haas School of Business.

Keisha Taylor works for TechSoup’s Global Data Services as Senior Manager, Business Planning and Research and writes regularly about the top trends in data. She has an MA in International Relations from the Universiteit van Amsterdam and her recent research has focused on Internet Governance, technology policy and its relation to the use of data for development.